ARTICLE I

DEFINITIONS

ARTICLE II

SALE AND PURCHASE OF LLC INTERESTS

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF

SELLER AND COLFAX

ARTICLE IV

REPRESENTATIONS AND WARRANTIES BY BUYER

ARTICLE V

COVENANTS AND AGREEMENTS

ARTICLE VI

CONDITIONS PRECEDENT TO BUYER’S
OBLIGATION TO CLOSE

ARTICLE VII

CONDITIONS PRECEDENT TO SELLER’S
OBLIGATIONS TO CLOSE

ARTICLE VIII

THE CLOSING

ARTICLE IX

SURVIVAL; INDEMNIFICATION

ARTICLE X

TERMINATION

ARTICLE XI

MISCELLANEOUS

ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of November 21, 2004 (this “Agreement”), between Altra Holdings, Inc., a Delaware corporation (“Holdings”) and, its wholly-owned subsidiary, Altra Industrial Motion, Inc., a Delaware corporation (“Altra”).

ARTICLE I.

OFFICES

ARTICLE II.

MEETINGS OF STOCKHOLDERS

ARTICLE III.

DIRECTORS

ARTICLE IV.

NOTICES

ARTICLE V.

OFFICERS

ARTICLE VI.

CAPITAL STOCK

ARTICLE VII.

GENERAL PROVISIONS

ARTICLE VIII.
INDEMNIFICATION

ARTICLE IX.

AMENDMENTS

The name of this corporation is The Kilian Company and the original Certificate of Incorporation of this corporation was filed with the Secretary of State of the State of Delaware on August 17, 2004.

The Amended and Restated Certificate of Incorporation in the form of Exhibit A attached hereto has been duly adopted in accordance with the provisions of Sections 242, 245 and 228 of the General Corporation Law of the State of Delaware (“Delaware Corporate Law”).

The text of the Amended and Restated Certificate of Incorporation as heretofore amended or supplemented is hereby restated and further amended to read in its entirety as set forth in Exhibit A attached hereto.

ARTICLE I

ARTICLE II

ARTICLE III

ARTICLE IV

ARTICLE V

ARTICLE VI

ARTICLE VII

ARTICLE VIII

ARTICLE ONE

DEFINITIONS AND INCORPORATION BY REFERENCE

ARTICLE TWO

THE NOTES

ARTICLE THREE

REDEMPTION

ARTICLE FOUR

COVENANTS

ARTICLE FIVE

SUCCESSOR CORPORATION

ARTICLE SIX

DEFAULT AND REMEDIES

ARTICLE SEVEN

TRUSTEE

ARTICLE EIGHT

SATISFACTION AND DISCHARGE OF INDENTURE

ARTICLE NINE

AMENDMENTS, SUPPLEMENTS AND WAIVERS

ARTICLE TEN

GUARANTEE

ARTICLE ELEVEN

MISCELLANEOUS

ARTICLE TWELVE

SECURITY

AGREEMENT - PREAMBLE

ARTICLE I - RECOGNITION

ARTICLE II - HOURS OF WORK

ARTICLE III - HOLIDAYS.

ARTICLE IV - VACATIONS

ARTICLE V - SENIORITY

ARTICLE VI - ADJUSTMENT OF GRIEVANCE

ARTICLE VII - WAGES

ARTICLE VIII - JOB EVALUATION

ARTICLE IX - MANAGEMENT

ARTICLE X - SUSPENSIONS AND DISCHARGE

ARTICLE XI - SAFETY AND HEALTH

ARTICLE XII - INSURANCE

ARTICLE XIII - PENSION

ARTICLE XIV - S.U.B.

ARTICLE XV - MILITARY SERVICE

ARTICLE XVI - BULLETIN BOARDS

ARTICLE XVII - STRIKE AND LOCKOUT

ARTICLE XVIII - TERMINATION

APPENDIX I – JOB CLASSIFICATIONS

Article 4 - NO STRIKE-NO LOCKOUT

Article 6 - CHECK-OFF

AUTHORIZATION FOR CHECK-OFF OF DUES

7.31 TEMPORARY LAYOFFS - A temporary layoff due to breakdown, shortage of material or other emergency conditions may be made for a period not to exceed four (4) regular working days, without regard to seniority or shift. During such temporary layoff, an employee may not exercise seniority transfer privileges.

Article 8 - HOURS AND PREMIUM PAY

PAID HOLIDAYS

Article 23 - ON THE JOB INJURY

Subject: Notice of Plant Closing and Severance Pay

1. Definitions. Each of the following terms used herein shall have the following meanings:

2. Sale of Stock.

3. Forfeiture Restriction.

4. Escrow of Shares.

5. Restrictions on Transfer.

6. Right of First Refusal on Sale of Shares by Participant.

7. Drag-Along Right.

8. Right to Repurchase Shares.

9. Representations, Warranties, Covenants, and Acknowledgments. The Participant hereby represents, warrants, covenants, acknowledges and agrees that:

10. Stock Certificate Legends. The share certificate(s) evidencing the Shares issued hereunder shall be endorsed with the following legends and any other legend required by any applicable state securities laws:

11. Adjustment for Stock Split. All references to the number of Shares in this Agreement shall be appropriately adjusted to reflect any stock split, reverse stock split or stock dividend or other similar change in the Shares which may be made by the Company after the date of this Agreement.

12. Taxes. Notwithstanding anything to the contrary in this Agreement, the Company shall be entitled to require payment in cash or deduction from other compensation payable to the Participant of any sums required by federal, state or local tax law to be withheld with respect to the issuance or lapsing of restrictions on the Shares. The Company shall not be obligated to deliver any new certificate representing vested Shares to the Participant or his legal representative unless and until the Participant or his legal representative shall have paid or otherwise satisfied in full the amount of all federal, state and local taxes applicable to the taxable income of the Participant resulting from the grant of the Shares or the lapse or removal of the Forfeiture Restriction.

13. General Provisions.

1. Sale of Stock. Subject to the terms hereof, the Company shall sell to Purchaser and Purchaser shall purchase from the Company, One Thousand (1000) shares of common stock of the Company (the “Stock”) at a price of $48,814.443 per share, or $48,814,443 in the aggregate (the “Purchase Price”).

2. Payment of Purchase Price. Concurrently with the execution of this Agreement, the Purchaser shall deliver to the Secretary of the Company the aggregate Purchase Price payable for the Stock in cash and all of the outstanding capital stock of The Kilian Company, in each case as set forth on Exhibit A hereto.

3. Issuance of Shares. Upon execution of this Agreement, the Company shall issue a duly executed certificate evidencing the Stock in the name of Purchaser.

4. Representations and Warranties of Purchaser.

5. Miscellaneous.

2.01 Sale and Purchase of LLC Interests.

2.02 Purchase Price.

2.03 Purchase Price Adjustment.

2.04 Purchase Price Allocation.

3.01 Authorization.

3.02 LLC Interests to be Transferred.

3.03 Organization and Standing.

3.04 Capitalization.

3.05 Litigation; Compliance with Law.

3.06 Financial Statements and Condition.

3.07 Intellectual Property; Licenses.

3.08 Property, Assets, and Leases.

3.09 Conflicts.

3.10 Taxes.

3.11 Employee Benefit Plans.

3.12 Acquired Companies’ Contracts.

3.13 Environmental Matters.

3.15 No Brokers.

3.16 Labor Matters.

3.19 Conduct of Business; Absence of Material Adverse Change.

3.20 Insurance.

3.21 Records and Books.

3.22 Customers and Suppliers.

3.23 Transactions with Interested Persons.

3.24 Company Products.

4.01 Organization and Standing.

4.02 Authorization.

4.03 Absence of Litigation; Compliance With Laws.

4.04 Investment Intent.

4.05 Experience.

4.06 No Brokers.

4.07 Financial Ability to Perform.

4.08 No Reliance.

5.01 Interim Operations of the Acquired Companies and the Subsidiaries.

5.02 Reasonable Access; Confidentiality.

5.03 Employment.

5.04 Compensation and Employee Benefits.

5.05 Filings; Other Action.

5.06 Publicity.

5.07 Records.

5.08 Tax Matters.

5.09 Hart-Scott-Rodino.

5.10 Non-Competition; Non-Solicitation; Confidentiality.

5.11 Insurance.

5.12 Consents.

5.13 Further Assurances.

5.14 Disclosure Supplements.

5.15 Cooperation with Financing.

5.16 Transaction Related Taxes.

5.17 Use of Colfax Name.

5.18 Transition Services Agreement.

6.01 Representations and Covenants.

6.02 Delivery of Documents.

6.03 Legal Proceedings.

6.04 Consents and Approvals.

6.05 Other Conditions.

7.01 Representations and Covenants.

7.02 Delivery of Purchase Price and Documents.

7.03 Legal Proceedings.

7.04 Consents and Approvals.

8.01 Closing.

8.02 Delivery by Seller.

8.03 Delivery by Buyer.

9.01 Survival Periods.

9.02 Indemnification by Seller and Colfax.

9.03 Indemnification by Buyer.

9.04 Conditions of Indemnification.

9.05 Exclusive Remedy.

9.06 Limitations on Seller and Colfax’s Environmental Obligations.

9.07 Buyer Cooperation.

10.01 Termination.

10.02 Procedure Upon Termination.

10.03 Effect of Termination.

11.01 Additional Actions and Documents.

11.02 Expenses.

11.03 Notices.

11.04 Waiver.

11.05 Benefit and Assignment.

11.06 Entire Agreement; Amendment.

11.07 Severability.

11.08 Governing Law.

11.09 Signature in Counterparts.

11.10 Specific Performance.

11.11 Arbitration.

11.12 Exclusion of Danaher Corporation.

Section 1. Registered Office. The registered office shall be at the office of National Registered Agents, Inc. in the City of Dover, County of Kent, State of Delaware.

Section 2. Other Offices. The corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require.

Section 1. Annual Meeting. An annual meeting of the stockholders for the election of directors shall be held at such place either within or without the State of Delaware as shall be designated on an annual basis by the Board of Directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Any other proper business may be transacted at the annual meeting.

Section 2. Notice of Annual Meeting. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting.

Section 3. Voting List. The officer who has charge of the stock ledger of the corporation shall prepare and make, or cause a third party to prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

Section 4. Special Meetings. Special meetings of the stockholders of this corporation, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, shall be called by the Chief Executive Officer, President or Secretary at the request in writing of a majority of the members of the Board of Directors, the Chief Executive Officer, the President or holders or 10% of all outstanding stock of this corporation then entitled to vote, and may not be called absent such a request. Such request shall state the purpose or purposes of the proposed meeting.

Section 5. Notice of Special Meetings. As soon as reasonably practicable after receipt of a request as provided in Section 4 of this Article II, written notice of a special meeting, stating the place, date (which shall be not less than ten nor more than sixty days from the date of the notice) and hour of the special meeting and the purpose or purposes for which the special meeting is called, shall be given to each stockholder entitled to vote at such special meeting.

Section 6. Scope of Business at Special Meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

Section 7. Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the chairman of the meeting or the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting as provided in Section 5 of this Article II.

Section 8. Qualifications to Vote. The stockholders of record on the books of the corporation at the close of business on the record date as determined by the Board of Directors and only such stockholders shall be entitled to vote at any meeting of stockholders or any adjournment thereof.

Section 9. Record Date. The Board of Directors may fix a record date for the determination of the stockholders entitled to notice of or to vote at any stockholders’ meeting and at any adjournment thereof, or to express consent to corporate action in writing without a meeting, or to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action. The record date shall not be more than sixty nor less than ten days before the date of such meeting, and not more than sixty days prior to any other action. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of

business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 10. Action at Meetings. When a quorum is present at any meeting, the vote of the holders of a majority of the shares of stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of applicable law or of the Certificate of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question.

Section 11. Voting and Proxies. Unless otherwise provided in the Certificate of Incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Each proxy shall be revocable unless expressly provided therein to be irrevocable and unless it is coupled with an interest sufficient in law to support an irrevocable power.

Section 12. Action by Stockholders Without a Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in the State of Delaware (by hand or by certified or registered mail, return receipt requested), to its principal place of business, or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded provided, however, that action by written consent to elect directors, if less than unanimous, shall be in lieu of holding an annual meeting only if all the directorships to which directors could be elected at an annual meeting held at the effective time of such action are vacant and are filled by such action. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of stockholders to take the action were delivered to the corporation by delivery to its registered office in the State of Delaware (by hand or by certified or registered mail, return receipt requested), to its principal place of business, or to an officer or agent of the corporation having custody of the book in which proceedings or meetings of stockholders are recorded.

Section 1. Powers. The business of the corporation shall be managed by or under the direction of its Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by applicable law or by the Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders.

Section 2. Number; Election; Tenure and Qualification. The number of directors which shall constitute the whole board shall be fixed from time to time by resolution of the Board of Directors or by the Stockholders at an annual meeting of the Stockholders (unless the directors are elected by written consent in lieu of an annual meeting as provided in Article II, Section 12). With the exception of the first Board of Directors, which shall be elected by the incorporator, and except as provided in the corporation’s Certificate of Incorporation or in Section 3 of this Article III, the directors shall be elected at the annual meeting of the stockholders by a plurality vote of the shares represented in person or by proxy and each director elected shall hold office until his successor is elected and qualified unless he shall resign, become disqualified, disabled, or otherwise removed. Directors need not be stockholders.

Section 3. Vacancies and Newly Created Directorships. Unless otherwise provided in the Certificate of Incorporation, vacancies and newly-created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director. The directors so chosen shall serve until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by applicable law. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.

Section 4. Location of Meetings. The Board of Directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware.

Section 5. Meeting of Newly Elected Board of Directors. The first meeting of each newly elected Board of Directors shall be held immediately following the annual meeting of stockholders and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event such meeting is not held at such time, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors.

Section 6. Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by

the Board of Directors; provided that any director who is absent when such a determination is made shall be given notice of such location.

Section 7. Special Meetings. Special meetings of the Board of Directors may be called by the Chief Executive Officer or President on two days’ notice to each director by mail, overnight courier service or facsimile; special meetings shall be called by the Chief Executive Officer, President or Secretary in a like manner and on like notice on the written request of two directors unless the Board of Directors consists of only one director, in which case special meetings shall be called by the Chief Executive Officer, President or Secretary in a like manner and on like notice on the written request of the sole director. Notice may be waived in accordance with Section 229 of the General Corporation Law of the State of Delaware.

Section 8. Quorum and Action at Meetings. At all meetings of the Board of Directors, a majority of the directors then in office shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 9. Action Without a Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee.

Section 10. Telephonic Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

Section 11. Committees. The Board of Directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

Section 12. Committee Authority. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to (a) approving, adopting or recommending to the stockholders, any action or matter expressly required by the General Corporation Law of the State of Delaware to be submitted to stockholders for approval, or (b) adopting, amending or repealing any Bylaw of the corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors.

Section 13. Committee Minutes. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required to do so by the Board of Directors.

Section 14. Directors Compensation. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, the Board of Directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

Section 15. Resignation. Any director or officer of the corporation may resign at any time. Each such resignation shall be made in writing and shall take effect at the time specified therein, or, if no time is specified, at the time of its receipt by either the Board of Directors, the President or the Secretary. The acceptance of a resignation shall not be necessary to make it effective unless expressly so provided in the resignation.

Section 16. Removal. Unless otherwise restricted by the Certificate of Incorporation, these Bylaws or applicable law, any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors.

Section 1. Notice to Directors and Stockholders. Whenever, under the provisions of the statutes or of the Certificate of Incorporation or of these Bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent of the corporation that the notice has been given shall in the absence of fraud, be prima facie evidence

of the facts stated therein. Notice to directors may also be given by telephone, facsimile or telegram (with confirmation of receipt).

Section 2. Waiver. Whenever any notice is required to be given under the provisions of the statutes or of the Certificate of Incorporation or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. The written waiver need not specify the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors, or members of a committee of directors. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Attendance at the meeting is not a waiver of any right to object to the consideration of matters required by the General Corporation Law of the State of Delaware to be included in the notice of the meeting but not so included, if such objection is expressly made at the meeting.

Section 1. Enumeration. The officers of the corporation shall be chosen by the Board of Directors and shall include a Chief Executive Officer, President, a Secretary, a Treasurer or Chief Financial Officer and such other officers with such other titles as the Board of Directors shall determine. The Board of Directors may elect from among its members a Chairman or Chairmen of the Board and a Vice Chairman of the Board. The Board of Directors may also choose one or more Vice-Presidents, Assistant Secretaries and Assistant Treasurers. Any number of offices may be held by the same person, unless the Certificate of Incorporation or these Bylaws otherwise provide.

Section 2. Election. The Board of Directors at its first meeting after each annual meeting of stockholders shall elect a President, a Secretary, a Treasurer and such other officers with such other titles as the Board of Directors shall determine.

Section 3. Appointment of Other Agents. The Board of Directors may appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

Section 4. Compensation. The salaries of all officers of the corporation shall be fixed by the Board of Directors or a committee thereof. The salaries of agents of the corporation shall, unless fixed by the Board of Directors, be fixed by the President or any Vice-President of the corporation.

Section 5. Tenure. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the directors of the Board of

Directors. Any vacancy occurring in any office of the corporation shall be filled by the Board of Directors.

Section 6. Chairman of the Board and Vice-Chairman of the Board. The Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which the Chairman shall be present. The Chairman shall have and may exercise such powers as are, from time to time, assigned to the Chairman by the Board of Directors and as may be provided by law. In the absence of the Chairman of the Board, the Vice Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which the Vice Chairman shall be present. The Vice Chairman shall have and may exercise such powers as are, from time to time, assigned to such person by the Board of Directors and as may be provided by law.

Section 7. Chief Executive Officer/President. The President shall be the Chief Executive Officer of the corporation unless such title is assigned to another officer of the corporation; in the absence of a Chairman and Vice Chairman of the Board, the Chief Executive Officer shall preside as the chairman of meetings of the stockholders and the Board of Directors; and the President shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The Chief Executive Officer or any President or Vice President shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation.

Section 8. Vice-President. In the absence of the President or in the event of the President’s inability or refusal to act, the Vice-President, if any (or in the event there be more than one Vice-President, the Vice-Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. The Vice-President shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

Section 9. Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision the Secretary shall be subject. The Secretary shall have custody of the corporate seal of the corporation and the Secretary, or an Assistant Secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the Secretary’s signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by such officer’s signature.

Section 10. Assistant Secretary. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the Secretary or in the event of the Secretary’s inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

Section 11. Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors, President or Chief Executive Officer, taking proper vouchers for such disbursements, and shall render to the President, Chief Executive Officer and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all such transactions as Treasurer and of the financial condition of the corporation. If required by the Board of Directors, the Treasurer shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of the Treasurer’s office and for the restoration to the corporation, in case of the Treasurer’s death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the possession or under the control of the Treasurer that belongs to the corporation.

Section 12. Assistant Treasurer. The Assistant Treasurer, or if there be more than one, the Assistant Treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the Treasurer or in the event of the Treasurer’s inability or refusal to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

Section 1. Certificates. The shares of the corporation shall be represented by a certificate, unless and until the Board of Directors adopts a resolution permitting shares to be uncertificated. Certificates shall be signed by, or in the name of the corporation by, (a) the Chairman of the Board, the Vice-Chairman of the Board, the Chief Executive Officer, the President or a Vice-President, and (b) the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, certifying the number of shares owned by such stockholder in the corporation. Certificates may be issued for partly paid shares and in such case upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be specified.

Section 2. Class or Series. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and

the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the General Corporation Law of the State of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the Delaware Corporation Law or a statement that the corporation will furnish without charge, to each stockholder who so requests, the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

Section 3. Signature. Any of or all of the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

Section 4. Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or such owner’s legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

Section 5. Transfer of Stock. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be canceled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation.

Section 6. Record Date. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholder or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to

receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 7. Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

Section 1. Dividends. Dividends upon the capital stock of the corporation, subject to the applicable provisions, if any, of the Certificate of Incorporation, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property or in shares of capital stock, subject to the provisions of the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purposes as the Board of Directors shall think conducive to the interest of the corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.

Section 2. Checks. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

Section 3. Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.

Section 4. Seal. The Board of Directors may adopt a corporate seal having inscribed thereon the name of the corporation, the year of its organization and the words “Corporate Seal, Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

Section 5. Loans. The Board of Directors of this corporation may, without stockholder approval, authorize loans to, or guaranty obligations of, or otherwise assist, including, without limitation, the adoption of employee benefit plans under which loans and

guarantees may be made, any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever, in the judgment of the Board of Directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest, and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation.

Section 1. Third Party Actions. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (each an “Indemnitee”), against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding.

Section 2. Derivative Actions. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit.

Section 3. Expenses. To the extent that a director, officer, employee or agent of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Article VIII, Sections 1 and 2, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith.

Section 4. Authorization and Request for Indemnification. Any indemnification requested by the Indemnitee under Article VIII, Section 1 hereof shall be made no later than ten (10) days after receipt of the written request of the Indemnitee, unless it shall have been adjudicated by a court of final determination that the Indemnitee did not act in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Any indemnification requested by the Indemnitee under Article VIII, Section 2 hereof shall be made no later than ten (10) days after receipt of the written request of the Indemnitee, unless it shall have been adjudicated by a court of final determination that the Indemnitee did not act in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation, the Indemnitee shall have been finally adjudged to be liable to the corporation by a court of competent jurisdiction due to willful misconduct or a

culpable nature in the performance of the Indemnitee’s duty to the corporation unless and only to the extent that any court in which such proceeding was brought shall determine upon application that despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnify for such expenses as such court shall deem proper.

Section 5. Advance Payment of Expenses. Subject to Article VIII, Section 4 above, the corporation shall advance all expenses incurred by the Indemnitee in connection with the investigation, defense, settlement or appeal of any proceeding to which the Indemnitee is a party or is threatened to be made a party by reason of the fact that the Indemnitee is or was an agent of the corporation. The Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the corporation. The advances to be made hereunder shall be paid by the corporation to or on behalf of the Indemnitee within thirty (30) days following delivery of a written request therefor by the Indemnitee to the corporation.

(A) Classes of Stock. This corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares which this corporation is authorized to issue is Two Hundred Twenty-Five Thousand (225,000) shares, each with a par value of $0.00001 per share. One Hundred Twenty-Five Thousand (125,000) shares shall be Common Stock and One Hundred Thousand (100,000) shares shall be Preferred Stock..

(B) Rights, Preferences and Restrictions of Preferred Stock. The Preferred Stock authorized by this Amended and Restated Certificate of Incorporation may be issued from time to time in one or more series. The first series of Preferred Stock shall be designated “Series A Preferred Stock” and shall consist of One Hundred Thousand (100,000) shares. The rights, preferences, privileges, and restrictions granted to and imposed on the Series A Preferred Stock are as set forth below in this Article IV(B) ; provided, however, that the holders of an aggregate of more than 50% of the then outstanding shares of the Series A Preferred Stock may waive any of the following rights, powers, preferences or privileges applicable to all shares of the Series A Preferred Stock in any given instance without prejudice to such rights, powers, preferences or privileges in any other instance, and any such waiver shall be bind all future holders of the shares of Series A Preferred Stock:

(C) Common Stock.

(A) To the fullest extent permitted by the Delaware General Corporation Law as the same exists or as may hereafter be amended, no director of this corporation shall be personally liable to this corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the Delaware General Corporation Law is amended after approval by the stockholders of this Amended and Restated Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of this corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law as so amended.

(B) This corporation shall indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding whether criminal, civil, administrative or investigative, by reason of the fact that he, his testator or intestate is or was a director, officer or employee of this corporation or any predecessor of this corporation or serves or served at any other enterprise as a director, officer or employee at the request of this corporation or any predecessor to this corporation to the same extent as permitted under subparagraph (a) above.

(C) Neither any amendment nor repeal of this Article VIII, nor the adoption of any provision of this Amended and Restated Certificate of Incorporation inconsistent with this Article VIII, shall eliminate or reduce the effect of this Article VIII in respect of any matter occurring or any action or proceeding accruing or arising or that, but for this Article VIII, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.

(D) This corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of this corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not this corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

(a) Unless the Exchange Offer would not be permitted by applicable laws or a policy of the SEC, the Company shall (and shall cause each Subsidiary Guarantor to) (i) use commercially reasonable efforts to prepare and file with the SEC promptly after the date hereof and by the Filing Date, a registration statement (the “Exchange Registration Statement”) on an appropriate form under the Securities Act with respect to an offer (the “Exchange Offer”) to the Holders of Notes to issue and deliver to such Holders, in exchange for the Notes, a like principal amount of Exchange Notes, (ii) use commercially reasonable efforts to cause the Exchange Registration Statement to become effective as promptly as practicable after the filing thereof and on or before the Effectiveness Date, (iii) use its best efforts to keep the Exchange Registration Statement effective until the consummation of the Exchange Offer in accordance with its terms, and (iv) commence the Exchange Offer and use its best efforts to issue on or prior to 30 Business Days after the date on which the Exchange Registration Statement is declared effective, Exchange Notes in exchange for all Notes tendered prior thereto in the Exchange Offer. The Exchange Offer shall not be subject to any

conditions, other than that the Exchange Offer does not violate applicable law or any applicable interpretation of the staff of the SEC.

(b) The Exchange Notes shall be issued under, and entitled to the benefits of, (i) the Indenture or a trust indenture that is identical to the Indenture (other than such changes as are necessary to comply with any requirements of the SEC to effect or maintain the qualifications thereof under the TIA) and (ii) the Collateral Agreements.

(c) Interest on the Exchange Notes and Private Exchange Notes will accrue (i) from the later of (A) the last interest payment date on which interest was paid on the Notes surrendered in exchange therefor, or (B) if the Notes are surrendered for exchange on a date in a period which includes the record date for an interest payment date to occur on or after the date of such exchange and as to which interest was paid, the date of such interest payment date; or (ii) if no interest has been paid on the Notes, from the Issue Date. Each Exchange Note and Private Exchange Note shall bear interest at the rate set forth thereon; provided, that interest with respect to the period prior to the issuance thereof shall accrue at the rate or rates borne by the Notes from time to time during such period.

(d) The Company may require each Holder as a condition to participation in the Exchange Offer to represent (i) that any Exchange Notes received by it will be acquired in the ordinary course of its business, (ii) that at the time of the commencement and consummation of the Exchange Offer such Holder has not entered into any arrangement or understanding with any Person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Notes in violation of the provisions of the Securities Act, (iii) that if such Holder is an “affiliate” of the Company within the meaning of Rule 405 of the Securities Act, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable to it, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Notes and (v) if such Holder is a Participating Broker-Dealer (as defined below), that it will deliver a Prospectus in connection with any resale of the Exchange Notes.

(e) The Company shall (and shall cause each Subsidiary Guarantor to) include within the Prospectus contained in the Exchange Registration Statement a section entitled “Plan of Distribution” reasonably acceptable to the Initial Purchaser which shall contain a summary statement of the positions taken or policies made by the staff of the SEC with respect to the potential “underwriter” status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange Notes received by such broker-dealer in the Exchange Offer for its own account in exchange for Notes that were acquired by it as a result of market-making or other trading activity (a “Participating Broker-Dealer”), whether such positions or policies have been publicly disseminated by the staff of the SEC or such positions or policies, in the judgment of the Initial Purchaser, represent the prevailing views of the staff of the SEC. Such “Plan of

Distribution” section shall also allow, to the extent permitted by applicable policies and regulations of the SEC, the use of the Prospectus by all Persons subject to the prospectus delivery requirements of the Securities Act, including, to the extent so permitted, all Participating Broker-Dealers, and include a statement describing the manner in which Participating Broker-Dealers may resell the Exchange Notes. The Company shall use its best efforts to keep the Exchange Registration Statement effective and to amend and supplement the Prospectus contained therein, in order to permit such Prospectus to be lawfully delivered by all Persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such Persons must comply with such requirements in order to resell the Exchange Notes; provided that such period shall not exceed the lesser of 180 days and the date on which all persons subject to the prospectus delivery requirements of the Securities Act have sold all Exchange Notes held by them (the “Applicable Period”).

(f) If, upon consummation of the Exchange Offer, the Initial Purchaser holds any Notes acquired by it and having the status of an unsold allotment in the initial distribution, the Company (upon the written request from the Initial Purchaser) shall, simultaneously with the delivery of the Exchange Notes in the Exchange Offer, issue and deliver to the Initial Purchaser, in exchange (the “Private Exchange”) for the Notes held by the Initial Purchaser, a like principal amount of Notes that are identical to the Exchange Notes except for the existence of restrictions on transfer thereof under the Securities Act and securities laws of the several states of the United States (the “Private Exchange Notes”) (and which are issued pursuant to the same indenture as the Exchange Notes). The Private Exchange Notes shall bear the same CUSIP number as the Exchange Notes.

(g) In connection with the Exchange Offer, the Company shall (and shall cause each Subsidiary Guarantor to):

(h) As soon as practicable after the close of the Exchange Offer or the Private Exchange, as the case may be, the Company shall (and shall cause each Subsidiary Guarantor to):

(i) The Exchange Notes and the Private Exchange Notes may be issued under (i) the Indenture or (ii) an indenture identical to the Indenture (other than such changes as are necessary to comply with any requirements of the SEC to effect or maintain the qualification thereof under the TIA), which in either event will provide that the Exchange Notes will not be subject to the transfer restrictions set forth in the Indenture, that the Private Exchange Notes will be subject to the transfer restrictions set forth in the Indenture, and that the Exchange Notes, the Private Exchange Notes and the Notes, if any, will be deemed one class of security (subject to the provisions of the Indenture) and entitled to participate in all the security granted by the Company pursuant to the Collateral Agreements and in any Subsidiary Guarantee (as such terms are defined in the Indenture) on an equal and ratable basis.

(j) If: (i) prior to the consummation of the Exchange Offer, the Holders of a majority in aggregate principal amount of Registrable Notes determines in its or their reasonable judgment that (A) the Exchange Notes would not, upon receipt, be tradeable by the Holders thereof without restriction under the Securities Act and the Exchange Act and without material restrictions under applicable Blue Sky or state securities laws, or (B) the interests of the Holders under this Agreement, taken as a whole, would be materially adversely affected by the consummation of the Exchange Offer; (ii) applicable interpretations of the staff of the SEC would not permit the consummation of the Exchange Offer prior to the Effectiveness Date; (iii) subsequent to the consummation of the Private Exchange, any Holder of Private Exchange Notes so requests; (iv) the Exchange Offer is not consummated within 30 Business Days from the date the Exchange Registration Statement was declared effective; or (v) in the case of (A) any Holder not permitted by applicable law or SEC policy to participate in the Exchange Offer, (B) any Holder participating in the Exchange Offer that receives Exchange Notes that may not be sold without restriction under state and federal securities laws

(other than due solely to the status of such Holder as an affiliate of the Company within the meaning of the Securities Act) or (C) any broker-dealer that holds Notes acquired directly from the Company or any of its affiliates and, in each such case contemplated by this clause (v), such Holder notifies the Company within six months of consummation of the Exchange Offer, then the Company shall promptly (and in any event within five Business Days) deliver to the Holders (or in the case of an occurrence of any event described in clause (v) of this Section 2(j), to any such Holder) and the Trustee notice thereof (the “Shelf Notice”) and shall as promptly as possible thereafter (but in no event more than 45 days after delivery of the Shelf Notice) file an Initial Shelf Registration pursuant to Section 3.

(a) Initial Shelf Registration. The Company shall (and shall cause each Subsidiary Guarantor to), as promptly as practicable, file with the SEC a Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 covering all of the Registrable Notes (the “Initial Shelf Registration”). If the Company (and any Subsidiary Guarantor) has not yet filed an Exchange Registration Statement, the Company shall (and shall cause each Subsidiary Guarantor to) file with the SEC the Initial Shelf Registration on or prior to the Filing Date and shall use its best efforts to cause such Initial Shelf Registration to be declared effective under the Securities Act on or prior to the Effectiveness Date. Otherwise, the Company shall (and shall cause each Subsidiary Guarantor to) use its best efforts to file with the SEC the Initial Shelf Registration within 30 days of the delivery of the Shelf Notice and shall use its best efforts to cause such Shelf Registration to be declared effective under the Securities Act as promptly as practicable thereafter (but in no event more than 45 days after delivery of the Shelf Notice). The Initial Shelf Registration shall be on Form S-1 or another appropriate form permitting registration of such Registrable Notes for resale by Holders in the manner or manners reasonably designated by them (including, without limitation, one or more underwritten offerings). The Company and Subsidiary Guarantors shall not permit any securities other than the Registrable Notes to be included in any Shelf Registration. The Company shall (and shall cause each Subsidiary Guarantor to) use its best efforts to keep the Initial Shelf Registration continuously effective under the Securities Act until the date which is 24 months from the Closing Date (subject to extension pursuant to the last paragraph of Section 6(w) (the “Effectiveness Period”), or such shorter period

ending when (i) all Registrable Notes covered by the Initial Shelf Registration have been sold in the manner set forth and as contemplated in the Initial Shelf Registration, (ii) a Subsequent Shelf Registration covering all of the Registrable Notes covered by and not sold under the Initial Shelf Registration or an earlier Subsequent Shelf Registration has been declared effective under the Securities Act or (iii) there cease to be any outstanding Registrable Notes.

(b) Subsequent Shelf Registrations. If the Initial Shelf Registration or any Subsequent Shelf Registration (as defined below) ceases to be effective for any reason at any time during the Effectiveness Period (other than because of the sale of all of the securities registered thereunder), the Company shall (and shall cause each Subsidiary Guarantor to) use its best efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof, and in any event shall within 30 days of such cessation of effectiveness amend such Shelf Registration in a manner to obtain the withdrawal of the order suspending the effectiveness thereof, or file (and cause each Subsidiary Guarantor to file) an additional “shelf” Registration Statement pursuant to Rule 415 covering all of the Registrable Notes (a “Subsequent Shelf Registration”). If a Subsequent Shelf Registration is filed, the Company shall (and shall cause each Subsidiary Guarantor to) use its best efforts to cause the Subsequent Shelf Registration to be declared effective as soon as practicable after such filing and to keep such Subsequent Shelf Registration continuously effective for a period equal to the number of days in the Effectiveness Period less the aggregate number of days during which the Initial Shelf Registration or any Subsequent Shelf Registration was previously continuously effective. As used herein the term “Shelf Registration” means the Initial Shelf Registration and any Subsequent Shelf Registrations

(c) Supplements and Amendments. The Company shall promptly supplement and amend any Shelf Registration if required by the rules, regulations or instructions applicable to the registration form used for such Shelf Registration or if required by the Securities Act.

(d) Provision of Information. No Holder of Registrable Notes shall be entitled to include any of its Registrable Notes in any Shelf Registration pursuant to this Agreement unless such Holder furnishes to the Company and the Trustee in writing, within 20 days after receipt of a written request therefor, such information as the Company and the Trustee after conferring with counsel with regard to information relating to Holders that would be required by the SEC to be included in such Shelf Registration or Prospectus included therein, may reasonably request for inclusion in any Shelf Registration or Prospectus included therein, and no such Holder shall be entitled to Additional Interest pursuant to Section 4 hereof unless and until such Holder shall have provided such information.

(a) The Company and each Subsidiary Guarantor acknowledges and agrees that the Holders of Registrable Notes will suffer damages if the Company or any Subsidiary Guarantor fails to fulfill its material obligations under Section 2 or Section 3 hereof and that it would not be feasible to ascertain the extent of such damages with precision. Accordingly, the Company and the Subsidiary Guarantors agree to pay additional cash interest on the Notes (“Additional Interest”) under the circumstances and to the extent set forth below (each of which shall be given independent effect):

(b) The Company shall notify the Trustee within three Business Days after each and every date on which an event occurs in respect of which Additional Interest is required to be paid (an “Event Date”). Any amounts of Additional Interest due pursuant to clause (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be payable in cash, on the dates and in the manner provided in the Indenture and whether or not any cash interest would then be payable on such date, commencing with the first such semi-annual date occurring after any such Additional Interest commences to accrue. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Notes, multiplied by a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months and, in the case of a partial month, the actual number of days elapsed), and the denominator of which is 360.

(a) Prepare and file with the SEC as soon as practicable after the date hereof but in any event on or prior to the Filing Date, the Exchange Registration Statement or if the Exchange Registration Statement is not filed because of the circumstances contemplated by Section 2(j), a Shelf Registration as prescribed by Section 3, and use its commercially reasonable efforts to cause each such Registration Statement to become effective and remain effective as provided herein; provided that, if (1) a Shelf Registration is filed pursuant to Section 3 or (2) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period relating thereto, before filing any Registration Statement or Prospectus or any amendments or supplements thereto the Company shall (and shall cause each Subsidiary Guarantor to), if requested, furnish to and afford the Holders of the Registrable Notes to be registered pursuant to such Shelf Registration Statement, each Participating Broker-Dealer, the managing underwriters, if any, and each of their respective counsel, a reasonable opportunity to review copies of all such documents (including copies of any documents to be incorporated by reference therein and all exhibits thereto) proposed to be filed (in each case at least five Business Days prior to such filing). The Company and each Subsidiary Guarantor shall not file any such Registration Statement or Prospectus or any amendments or supplements thereto in respect of which the Holders must provide information for the inclusion therein without the Holders being afforded an opportunity to review such documentation if the holders of a majority in aggregate principal amount of the Registrable Notes covered by such Registration Statement, or any such Participating Broker-Dealer, as the case may be, the managing underwriters, if any, or any of their respective counsel shall reasonably object in writing on a timely basis. A Holder shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omits to state any material fact necessary to make the statements therein not misleading or fails to comply with the applicable requirements of the Securities Act.

(b) Provide an indenture trustee for the Registrable Notes, the Exchange Notes or the Private Exchange Notes, as the case may be, and cause the Indenture (or other indenture relating to the Registrable Notes) to be qualified under the TIA not later than the effective date of the first Registration Statement; and in connection therewith, to effect such changes to such indenture as may be required for such indenture to be so qualified in accordance with the terms of the TIA; and execute, and use its best efforts to cause such trustee to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the SEC to enable such indenture to be so qualified in a timely manner.

(c) Prepare and file with the SEC such pre-effective amendments and post-effective amendments to each Shelf Registration or Exchange Registration Statement, as the case may be, as may be necessary to keep such Registration Statement continuously effective for the Effectiveness Period or the Applicable Period, as the case may be; cause the related Prospectus to be supplemented by any Prospectus supplement required by applicable law, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; and comply with the provisions of the Securities Act and the Exchange Act applicable to them with respect to the disposition of all securities covered by such Registration Statement as so amended or in such Prospectus as so supplemented and with respect to the subsequent resale of any securities being sold by a Participating Broker-Dealer covered by any such Prospectus. The Company and each Subsidiary Guarantor shall not, during the Applicable Period, voluntarily take any action that would result in selling Holders of the Registrable Notes covered by a Registration Statement or Participating Broker-Dealers seeking to sell Exchange Notes not being able to sell such Registrable Notes or such Exchange Notes during that period, unless such action is required by applicable law, rule or regulation or permitted by this Agreement.

(d) Furnish to such selling Holders and Participating Broker-Dealers who so request in writing (i) upon the Company’s receipt, a copy of the order of the SEC declaring such Registration Statement and any post effective amendment thereto effective, (ii) such reasonable number of copies of such Registration Statement and of each amendment and supplement thereto (in each case including any documents incorporated therein by reference and all exhibits), (iii) such reasonable number of copies of the Prospectus included in such Registration Statement (including each preliminary Prospectus) and each amendment and supplement thereto, and such reasonable number of copies of the final Prospectus as filed by the Company and each Subsidiary Guarantor pursuant to Rule 424(b) under the Securities Act, in conformity with the requirements of the Securities Act and each amendment and supplement thereto, and (iv) such other documents (including any amendments required to be filed pursuant to clause (c) of this Section), as any such Person may reasonably request in writing. The Company and the Subsidiary Guarantors hereby consent to the use of the Prospectus by each of the selling Holders of Registrable Notes or each such Participating Broker-Dealer, as the case may be, and the underwriters or agents, if any, and dealers, if any, in connection with the offering and sale of the Registrable Notes covered by, or the sale by Participating Broker-Dealers of the Exchange Notes pursuant to, such Prospectus and any amendment or supplement thereto.

(e) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period relating thereto, the Company shall notify in writing the selling Holders of Registrable Notes, or each such Participating Broker-Dealer, as the case may be, the managing underwriters, if any, and each of their respective counsel promptly (but

in any event within two Business Days) (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective (including in such notice a written statement that any Holder may, upon request, obtain, without charge, one conformed copy of such Registration Statement or post-effective amendment including financial statements and schedules, documents incorporated or deemed to be incorporated by reference and exhibits), (ii) of the issuance by the SEC of any stop order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of any Prospectus or the initiation of any proceedings for that purpose, (iii) if at any time when a Prospectus is required by the Securities Act to be delivered in connection with sales of the Registrable Notes the representations and warranties of the Company and any Subsidiary Guarantor contained in any agreement (including any underwriting agreement) contemplated by Section 6(n) hereof cease to be true and correct, (iv) of the receipt by the Company or any Subsidiary Guarantor of any notification with respect to the suspension of the qualification or exemption from qualification of a Registration Statement or any of the Registrable Notes or the Exchange Notes to be sold by any Participating Broker-Dealer for offer or sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose, (v) of the happening of any event, the existence of any condition or any information becoming known that makes any statement made in such Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in, or amendments or supplements to, such Registration Statement, Prospectus or documents so that, in the case of the Registration Statement and the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, (vi) of any reasonable determination by the Company or any Subsidiary Guarantor that a post-effective amendment to a Registration Statement would be appropriate and (vii) of any request by the SEC for amendments to the Registration Statement or supplements to the Prospectus or for additional information relating thereto.

(f) Use its best efforts to prevent the issuance of any order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of a Prospectus or suspending the qualification (or exemption from qualification) of any of the Registrable Notes or the Exchange Notes to be sold by any Participating Broker-Dealer, for sale in any jurisdiction, and, if any such order is issued, to use its best efforts to obtain the withdrawal of any such order at the earliest possible date.

(g) If (A) a Shelf Registration is filed pursuant to Section 3, (B) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period or (C)

reasonably requested in writing by the managing underwriters, if any, or the Holders of a majority in aggregate principal amount of the Registrable Notes being sold in connection with an underwritten offering, (i) promptly incorporate in a Prospectus supplement or post-effective amendment such information or revisions to information therein relating to such underwriters or selling Holders as the managing underwriters, if any, or such Holders or any of their respective counsel reasonably request in writing to be included or made therein and (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after the Company has received notification of the matters to be incorporated in such Prospectus supplements or post-effective amendment.

(h) Prior to any public offering of Registrable Notes or any delivery of a Prospectus contained in the Exchange Registration Statement by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use its best efforts to register or qualify, and to cooperate with the selling Holders of Registrable Notes or each such Participating Broker-Dealer, as the case may be, the underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Notes or Exchange Notes, as the case may be, for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any selling Holder, Participating Broker-Dealer or any managing underwriter or underwriters, if any, reasonably request in writing; provided that where Exchange Notes held by Participating Broker-Dealers or Registrable Notes are offered other than through an underwritten offering, the Company and each Subsidiary Guarantor agree to cause its counsel to perform Blue Sky investigations and file any registrations and qualifications required to be filed pursuant to this Section 6(h), keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Exchange Notes held by Participating Broker-Dealers or the Registrable Notes covered by the applicable Registration Statement; provided that neither the Company nor any Subsidiary Guarantor shall be required to (A) qualify generally to do business in any jurisdiction where it is not then so qualified, (B) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or (C) subject itself to taxation in any such jurisdiction where it is not then so subject.

(i) If (A) a Shelf Registration is filed pursuant to Section 3 or (B) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 is requested to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, cooperate with the selling Holders of Registrable Notes and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Notes to be sold, which certificates shall not bear any restrictive legends and shall be in a form eligible for deposit with The Depository

Trust Company, and enable such Registrable Notes to be in such denominations and registered in such names as the managing underwriter or underwriters, if any, or Holders may reasonably request.

(j) Use its commercially reasonable efforts to cause the Registrable Notes covered by any Registration Statement to be registered with or approved by such governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter, if any, to consummate the disposition of such Registrable Notes, except as may be required solely as a consequence of the nature of such selling Holder’s business, in which case the Company shall (and shall cause each Subsidiary Guarantor to) cooperate in all reasonable respects with the filing of such Registration Statement and the granting of such approvals; provided that neither the Company nor any existing Subsidiary Guarantor shall be required to (A) qualify generally to do business in any jurisdiction where it is not then so qualified, (B) take any action that would subject it to general service of process in any jurisdiction where it is not then so subject or (C) subject itself to taxation in any such jurisdiction where it is not then so subject.

(k) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, upon the occurrence of any event contemplated by paragraph 6(e)(v) or 6(e)(vi) hereof, as promptly as practicable, prepare and file with the SEC, at the expense of the Company and the Subsidiary Guarantors, a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Notes being sold thereunder or to the purchasers of the Exchange Notes to whom such Prospectus will be delivered by a Participating Broker-Dealer, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and, if SEC review is required, use its best efforts to cause such post-effective amendment to be declared effective as soon as possible.

(l) Use its best efforts to cause the Registrable Notes covered by a Registration Statement to be rated with such appropriate rating agencies, if so requested in writing by the Holders of a majority in aggregate principal amount of the Registrable Notes covered by such Registration Statement or the managing underwriter or underwriters, if any.

(m) Prior to the initial issuance of the Exchange Notes, (i) provide the Trustee with one or more certificates for the Registrable Notes in a form eligible for deposit with The Depository Trust Company and (ii) provide a CUSIP number for the Exchange Notes.

(n) If a Shelf Registration is filed pursuant to Section 3, and the Registrable Notes are being offered in an Underwritten Offering, enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings of debt securities similar to the Notes, as may be appropriate in the circumstances) and take all such other actions in connection therewith (including those reasonably requested in writing by the managing underwriters, if any, or the Holders of a majority in aggregate principal amount of the Registrable Notes being sold) in order to expedite or facilitate the registration or the disposition of such Registrable Notes, and in such connection, whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, (i) make such representations and warranties to the Holders and the underwriters, if any, with respect to the business of the Company and its subsidiaries as then conducted, and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings of debt securities similar to the Notes, as may be appropriate in the circumstances, and confirm the same if and when reasonably required; (ii) obtain an opinion of counsel to the Company and the Subsidiary Guarantors and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, and the Holders of a majority in aggregate principal amount of the Registrable Notes being sold), addressed to each selling Holder and each of the underwriters, if any, covering the matters customarily covered in opinions of counsel to the Company and the Subsidiary Guarantors requested in underwritten offerings of debt securities similar to the Notes, as may be appropriate in the circumstances; (iii) obtain “cold comfort” letters and updates thereof (which letters and updates (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters) from the independent certified public accountants of the Company and the Subsidiary Guarantors (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to each of the underwriters, such letters to be in customary form and covering matters of the type customarily covered in “cold comfort” letters in connection with underwritten offerings of debt securities similar to the Notes, as may be appropriate in the circumstances, and such other matters as reasonably requested in writing by the underwriters; and (iv) deliver such documents and certificates as may be reasonably requested in writing by the Holders of a majority in aggregate principal amount of the Registrable Notes being sold and the managing underwriters, if any, to evidence the continued validity of the representations and warranties of the Company and its subsidiaries made pursuant to clause (i) above and to evidence compliance with any conditions contained in the underwriting agreement or other similar agreement entered into by the Company or any Subsidiary Guarantor.

(o) If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 is

required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, make available for inspection by any selling Holder of such Registrable Notes being sold, or each such Participating Broker-Dealer, as the case may be, any underwriter participating in any such disposition of Registrable Notes, if any, and any attorney, accountant or other agent retained by any such selling Holder or each such Participating Broker-Dealer, as the case may be, or underwriter (collectively, the “Inspectors”), at the offices where normally kept, during reasonable business hours, all financial and other records and pertinent corporate documents of the Company and its subsidiaries (collectively, the “Records”) as shall be reasonably necessary to enable them to exercise any applicable due diligence responsibilities, and cause the officers, directors and employees of the Company and its subsidiaries to supply all information reasonably requested in writing by any such Inspector in connection with such Registration Statement. Each Inspector shall agree in writing that it will keep the Records confidential and not disclose any of the Records unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in such Registration Statement, (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, (iii) the information in such Records is public or has been made generally available to the public other than as a result of a disclosure or failure to safeguard by such Inspector or (iv) disclosure of such information is, in the reasonable written opinion of counsel for any Inspector, necessary or advisable in connection with any action, claim, suit or proceeding, directly or indirectly, involving or potentially involving such Inspector and arising out of, based upon, related to, or involving this Agreement, or any transaction contemplated hereby or arising hereunder. Each selling Holder of such Registrable Notes and each such Participating Broker-Dealer will be required to agree that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company unless and until such is made generally available to the public. Each Inspector, each selling Holder of such Registrable Notes and each such Participating Broker-Dealer will be required to further agree that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and, to the extent practicable, use its best efforts to allow the Company, at its expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential at its expense.

(p) Comply with all applicable rules and regulations of the SEC and make generally available to the security holders of the Company with regard to any Applicable Registration Statement earning statements satisfying the provisions of section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 45 days after the end of any 12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which Registrable Notes are sold to underwriters in a firm commitment or best efforts underwritten offering and (ii) if not sold to underwriters in such an offering,

commencing on the first day of the first fiscal quarter of the Company after the effective date of a Registration Statement, which statements shall cover said 12-month periods.

(q) Upon consummation of an Exchange Offer or Private Exchange, obtain an opinion of counsel to the Company and the Subsidiary Guarantors (in form, scope and substance reasonably satisfactory to the Initial Purchaser), addressed to the Trustee for the benefit of all Holders participating in the Exchange Offer or Private Exchange, as the case may be, to the effect that (i) the Company and the Subsidiary Guarantors have duly authorized, executed and delivered the Exchange Notes or the Private Exchange Notes, as the case may be, and the Indenture, (ii) the Exchange Notes or the Private Exchange Notes, as the case may be, and the Indenture constitute legal, valid and binding obligations of the Company and the Subsidiary Guarantors, enforceable against the Company and the Subsidiary Guarantors in accordance with their respective terms, except as such enforcement may be subject to customary United States and foreign exceptions and (iii) all obligations of the Company and the Subsidiary Guarantors under the Exchange Notes or the Private Exchange Notes, as the case may be, and the Indenture are secured by Liens on the assets securing the obligations of the Company and the Subsidiary Guarantors under the Notes, Indenture and Collateral Agreements to the extent and as discussed in the Registration Statement.

(r) If the Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Registrable Notes by the Holders to the Company and the Subsidiary Guarantors (or to such other Person as directed by the Company and the Subsidiary Guarantors) in exchange for the Exchange Notes or the Private Exchange Notes, as the case may be, the Company and the Subsidiary Guarantors shall mark, or caused to be marked, on such Registrable Notes that the Exchange Notes or the Private Exchange Notes, as the case may be, are being issued as substitute evidence of the indebtedness originally evidenced by the Registrable Notes; provided that in no event shall such Registrable Notes be marked as paid or otherwise satisfied.

(s) Cooperate with each seller of Registrable Notes covered by any Registration Statement and each underwriter, if any, participating in the disposition of such Registrable Notes and their respective counsel in connection with any filings required to be made with the NASD.

(t) Use its best efforts to cause all Securities covered by a Registration Statement to be listed on each securities exchange, if any, on which similar debt securities issued by the Company are then listed.

(u) Use its best efforts to take such other steps as may be reasonably necessary to effect the registration of the Registrable Notes covered by a Registration Statement contemplated hereby.

(v) The Company may require each seller of Registrable Notes or Participating Broker-Dealer as to which any registration is being effected to furnish to the Company such information regarding such seller or Participating Broker-Dealer and the distribution of such Registrable Notes as the Company may, from time to time, reasonably request in writing. The Company may exclude from such registration the Registrable Notes of any seller who fails to furnish such information within a reasonable time (which time in no event shall exceed 45 days, subject to Section 3(d)) hereof) after receiving such request. Each seller of Registrable Notes or Participating Broker-Dealer as to which any registration is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished by such seller not materially misleading.

(w) Each Holder of Registrable Notes and each Participating Broker-Dealer agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by such Participating Broker-Dealer, as the case may be, that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 6(e)(2)(ii), 6(e)(2)(iii), 6(e)(2)(iv), 6(e)(2)(v), or 6(e)(2)(vi), such Holder will forthwith discontinue disposition of such Registrable Notes covered by a Registration Statement and such Participating Broker-Dealer will forthwith discontinue disposition of such Exchange Notes pursuant to any Prospectus and, in each case, forthwith discontinue dissemination of such Prospectus until such Holder’s or Participating Broker-Dealer’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(k), or until it is advised in writing (the “Advice”) by the Company and the Subsidiary Guarantors that the use of the applicable Prospectus may be resumed, and has received copies of any amendments or supplements thereto and, if so directed by the Company and the Subsidiary Guarantors, such Holder or Participating Broker-Dealer, as the case may be, will deliver to the Company all copies, other than permanent file copies, then in such Holder’s or Participating Broker-Dealer’s possession, of the Prospectus covering such Registrable Notes current at the time of the receipt of such notice. In the event the Company and the Subsidiary Guarantors shall give any such notice, the Applicable Period shall be extended by the number of days during such periods from and including the date of the giving of such notice to and including the date when each Participating Broker-Dealer shall have received (x) the copies of the supplemented or amended Prospectus contemplated by Section 6(k) or (y) the Advice.

(a) All fees and expenses incident to the performance of or compliance with this Agreement by the Company and the Subsidiary Guarantors shall be borne by the Company and the Subsidiary Guarantors, whether or not the Exchange Offer or a Shelf Registration is filed or becomes effective, including, without limitation, (i) all registration and filing fees, including, without limitation, (A) fees with respect to filings required to be made with the NASD in connection with any Underwritten Offering and (B) fees and expenses of compliance with state

securities or Blue Sky laws as provided in Section 6(h) hereof (including, without limitation, reasonable fees and disbursements of counsel in connection with Blue Sky qualifications of the Registrable Notes or Exchange Notes and determination of the eligibility of the Registrable Notes or Exchange Notes for investment under the laws of such jurisdictions (x) where the Holders are located, in the case of the Exchange Notes, or (y) as provided in Section 6(h), in the case of Registrable Notes or Exchange Notes to be sold by a Participating Broker-Dealer during the Applicable Period)), (ii) printing expenses, including, without limitation, expenses of printing Prospectuses if the printing of Prospectuses is requested by the managing underwriter or underwriters, if any, or by the Holders of a majority in aggregate principal amount of the Registrable Notes included in any Registration Statement or by any Participating Broker-Dealer during the Applicable Period, as the case may be, (iii) messenger, telephone and delivery expenses incurred in connection with the performance of their obligations hereunder, (iv) fees and disbursements of counsel for the Company, the Subsidiary Guarantors and, subject to 7(b), the Holders, (v) fees and disbursements of all independent certified public accountants referred to in Section 6 (including, without limitation, the expenses of any special audit and “cold comfort” letters required by or incident to such performance), (vi) rating agency fees and the fees and expenses incurred in connection with the listing of the Securities to be registered on any securities exchange, (vii) Securities Act liability insurance, if the Company and the Subsidiary Guarantors desire such insurance, (viii) fees and expenses of all other Persons retained by the Company and the Subsidiary Guarantors, (ix) fees and expenses of any “qualified independent underwriter” or other independent appraiser participating in an offering pursuant to Section 3 of Schedule E to the By-laws of the NASD, but only where the need for such a “qualified independent underwriter” arises due to a relationship with the Company and the Subsidiary Guarantors, (x) internal expenses of the Company and the Subsidiary Guarantors (including, without limitation, all salaries and expenses of officers and employees of the Company or the Subsidiary Guarantors performing legal or accounting duties), (xi) the expense of any annual audit, (xii) the fees and expenses of the Trustee and the Exchange Agent and (xiii) the expenses relating to printing, word processing and distributing all Registration Statements, underwriting agreements, securities sales agreements, indentures and any other documents necessary in order to comply with this Agreement.

(b) The Company and the Subsidiary Guarantors shall reimburse the Holders for the reasonable fees and disbursements of not more than one counsel chosen by the Holders of a majority in aggregate principal amount of the Registrable Notes to be included in any Registration Statement. The Company and the Subsidiary Guarantors shall pay all documentary, stamp, transfer or other transactional taxes attributable to the issuance or delivery of the Exchange Notes or Private Exchange Notes in exchange for the Notes; provided that the Company shall not be required to pay taxes payable in respect of any transfer involved in the issuance or delivery of any Exchange Note or Private Exchange Note in a name other than that of the Holder of the Note in respect of which such Exchange Note or Private Exchange Note is being issued. The Company and the Subsidiary Guarantors shall

reimburse the Holders for fees and expenses (including reasonable fees and expenses of counsel to the Holders) relating to any enforcement of any rights of the Holders under this Agreement.

(a) Indemnification by the Company and the Subsidiary Guarantors. The Company and the Subsidiary Guarantors jointly and severally agree to indemnify and hold harmless each Holder of Registrable Notes, Exchange Notes or Private Exchange Notes and each Participating Broker-Dealer selling Exchange Notes during the Applicable Period, each Person, if any, who controls each such Holder (within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act) and the officers, directors and partners of each such Holder, Participating Broker-Dealer and controlling person, to the fullest extent lawful, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable costs of preparation and reasonable attorneys’ fees as provided in this Section 8) and expenses (including, without limitation, reasonable costs and expenses incurred in connection with investigating, preparing, pursuing or defending against any of the foregoing) (collectively, “Losses”), as incurred, directly or indirectly caused by, related to, based upon, arising out of or in connection with any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or form of prospectus, or in any amendment or supplement thereto, or in any preliminary prospectus, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, but only to the extent, that such Losses are finally judicially determined by a court of competent jurisdiction in a final, unappealable order, except insofar as such Losses are solely based upon information relating to such Holder or Participating Broker-Dealer and furnished in writing to the Company and the Subsidiary Guarantors (or reviewed and approved in writing) by such Holder or Participating Broker-Dealer or their counsel expressly for use therein; provided, however, that the Company and the Subsidiary Guarantors will not be liable to any Indemnified Party (as defined below) under this Section 8 to the extent Losses were solely caused by an untrue statement or omission or alleged untrue statement or omission that was contained or made in any preliminary prospectus and corrected in the Prospectus or any amendment or supplement thereto if (i) the Prospectus does not contain any other untrue statement or omission or alleged untrue statement or omission of a material fact that was the subject matter of the related proceeding, (ii) any such Losses resulted from an action, claim or suit by any Person who purchased Registrable Notes or Exchange Notes which are the subject thereof from such Indemnified Party and (iii) it is established in the related proceeding that such Indemnified Party failed to deliver or provide a copy of the Prospectus (as amended or supplemented) to such Person with or prior to the confirmation of the sale of such Registrable Notes or Exchange Notes sold to such Person if required by applicable law, unless such failure to deliver or provide a copy of the Prospectus (as amended or supplemented) was a result of noncompliance by the Company

with Section 6 of this Agreement. The Company and the Subsidiary Guarantors also agree to indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, their officers, directors, agents and employees and each Person who controls such Persons (within the meaning of Section 5 of the Securities Act or Section 20(a) of the Exchange Act) to the same extent as provided above with respect to the indemnification of the Holders or the Participating Broker-Dealer.

(b) Indemnification by Holder. In connection with any Registration Statement, Prospectus or form of prospectus, any amendment or supplement thereto, or any preliminary prospectus in which a Holder is participating, such Holder shall furnish to the Company and the Subsidiary Guarantors in writing such information as the Company and the Subsidiary Guarantors reasonably request for use in connection with any Registration Statement, Prospectus or form of prospectus, any amendment or supplement thereto, or any preliminary prospectus and shall indemnify and hold harmless the Company, the Subsidiary Guarantors, their respective directors and each Person, if any, who controls the Company and the Subsidiary Guarantors (within the meaning of Section 15 of the Securities Act and Section 20(a) of the Exchange Act), and the directors, officers and partners of such controlling persons, to the fullest extent lawful, from and against all Losses arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading to the extent, but only to the extent, that such losses are finally judicially determined by a court of competent jurisdiction in a final, unappealable order to have resulted solely from an untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact contained in or omitted from any information so furnished in writing by such Holder to the Company and the Subsidiary Guarantors expressly for use therein. Notwithstanding the foregoing, in no event shall the liability of any selling Holder be greater in amount than such Holder’s Maximum Contribution Amount (as defined below).

(c) Conduct of Indemnification Proceedings. If any proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the party or parties from which such indemnity is sought (the “Indemnifying Party” or “Indemnifying Parties”, as applicable) in writing; provided, that the failure to so notify the Indemnifying Parties shall not relieve the Indemnifying Parties from any obligation or liability except to the extent (but only to the extent) that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal) that the Indemnifying Parties have been prejudiced materially by such failure.

(d) Contribution. If the indemnification provided for in this Section 8 is unavailable to an Indemnified Party or is insufficient to hold such Indemnified Party harmless for any Losses in respect of which this Section 8 would otherwise apply by its terms (other than by reason of exceptions provided in this Section 8), then each applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall have a joint and several obligation to contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and such Indemnified Party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party, on the one hand, and Indemnified Party, on the other hand, shall be determined by

reference to, among other things, whether any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent any such statement or omission. The amount paid or payable by an Indemnified Party as a result of any Losses shall be deemed to include any legal or other fees or expenses incurred by such party in connection with any proceeding, to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in Section 8(a) or 8(b) was available to such party.

(a) Remedies. In the event of a breach by either the Company or any of the Subsidiary Guarantors of any of their respective obligations under this Agreement, each Holder, in addition to being entitled to exercise all rights provided herein, in the Indenture or, in the case of the Initial Purchaser, in the Purchase Agreement, or granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and the Subsidiary Guarantors agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by either the Company or any of the Subsidiary Guarantors of any of the provisions of this Agreement and hereby further agree that, in the event of any action for specific performance in respect of such breach, the Company shall (and shall cause each Subsidiary Guarantor to) waive the defense that a remedy at law would be adequate.

(b) No Inconsistent Agreements. The Company and each of the Subsidiary Guarantors have not entered, as of the date hereof, and the Company and each of the Subsidiary Guarantors shall not enter, after the date of this Agreement, into any agreement with respect to any of its securities that is inconsistent with the rights granted to the Holders of Securities in this Agreement or otherwise conflicts with the provisions hereof. The Company and each of the Subsidiary Guarantors have not entered and will not enter into any agreement with respect to any of its securities that will grant to any Person piggy-back rights with respect to a Registration Statement.

(c) Adjustments Affecting Registrable Notes. The Company shall not, directly or indirectly, take any action with respect to the Registrable Notes as a class that would adversely affect the ability of the Holders to include such Registrable Notes in a registration undertaken pursuant to this Agreement.

(d) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, otherwise than with the prior written consent of the Holders of not less than a majority in aggregate principal amount of the then outstanding Registrable Notes in circumstances that would adversely affect any Holders of Registrable Notes; provided, however, that Section 8 and this Section 11(d) may not be amended, modified or supplemented without the prior written consent of each Holder. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders of Registrable Notes whose securities are being tendered pursuant to the Exchange Offer or sold pursuant to a Notes Registration Statement and that does not directly or indirectly affect, impair, limit or compromise the rights of other Holders of Registrable Notes may be given by Holders of at least a majority in aggregate principal amount of the Registrable Notes being tendered or being sold by such Holders pursuant to such Notes Registration Statement.

(e) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, registered first-class mail, next-day air courier or telecopier:

(f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto, including, without limitation and without the need for an express assignment, subsequent Holders of Securities.

(g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITS AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER

APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.

(j) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(k) Securities Held by the Company or Its Affiliates. Whenever the consent or approval of Holders of a specified percentage of Securities is required hereunder, Securities held by the Company or its affiliates (as such term is defined in Rule 405 under the Securities Act) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

(l) Third Party Beneficiaries. Holders and Participating Broker-Dealers are intended third party beneficiaries of this Agreement and this Agreement may be enforced by such Persons.

(m) Entire Agreement. This Agreement, together with the Purchase Agreement, the Indenture and the Collateral Agreements, is intended by the parties as a final and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein and any and all prior oral or written agreements, representations, or warranties, contracts, understanding, correspondence, conversations and memoranda between the Initial Purchaser on the one hand and the Company and the Subsidiary Guarantors on the

other, or between or among any agents, representatives, parents, subsidiaries, affiliates, predecessors in interest or successors in interest with respect to the subject matter hereof and thereof are merged herein and replaced hereby.

Employee Definition

Union Recognition

Union Membership

Union Policy

Union Dues

Union Transfers

Union Liability

Subcontracts

Operations, Continuous/Non-continuous

Breaks

Overtime, Paid

Overtime, Non-paid

Overtime Assignments

Holidays, Recognized

Holidays, Payment

Shutdowns

Jury Service

Bereavement

Wage Earners

Schedule

Eligibility

Vacation Pay

Vacation Pay Calculation

Vacation Year

Vacation Shutdown

Vacation Not-taken

Definition

Calculation of Continuous Service

Break in Continuous Service

Shift Preference/Shift Reassignment

Decrease in Work Force and Recalls

Bidding(Including Training)

Training Program

General Information

Officer Seniority

Temporary Job Assignments and Temporary Transfers

Disqualification

Procedure

General Information

Committee Membership

Leaves for Union Representatives

Grades and Rates

Starting Rates

Shift Premium

Reporting Pay

Call Back Pay

Management Rights

Initial Suspension

Hearing

Specific Reviews

Prior Records

Article 2 - RECOGNITION

1. Grant Of License in Marks. Colfax grants to the Licensed Companies a royalty-free, fully paid-up, nonexclusive, nontransferable, worldwide license to use the Marks in connection with the respective businesses of the Licensed Companies as set forth in this Agreement only (a) in the general manner that the Licensed Companies and PT used the Marks in connection with their respective businesses at or prior to Closing and (b) for a period of one (1) year after the date of Closing (the “Marks License”). The sole purpose of this Marks License is to allow the Licensed Companies time to rebrand and phase out of use of the Marks in connection with their respective businesses and a reasonable transition for their customers. The Licensed Companies are expressly prohibited from sublicensing the Marks or, except as may be necessary in connection with the Licensed Companies’ ordinary course of business, from making any expanded use of the Marks.

1. Employment. The Company shall employ Executive, and Executive hereby agrees to be employed by the Company, upon the terms and conditions set forth in this Agreement for the period beginning on the Effective Date and ending as provided in Section 3 hereof (the “Employment Period”).

2. Position and Duties.

3. Termination. The Employment Period shall terminate on the third anniversary of the Effective Date. The date on which the Employment Period terminates after any notice of non-renewal is referred to herein as the “Expiration Date.” Notwithstanding the foregoing, the Company and Executive agree that Executive is an “at-will” employee, subject only to the contractual rights upon termination set forth herein, and that the Employment Period (a) shall terminate automatically at any time upon Executive’s death, (b) shall terminate automatically at any time upon the Board’s determination of Executive’s Disability, (c) may be terminated by the Company at any time for any reason or no reason (whether for Cause or without Cause) by giving Executive written notice of the termination, and (d) may be terminated by Executive for any reason or no reason (including for Good Reason) by giving the Company written notice at least 60 days in advance of his termination date. Notwithstanding anything herein to the contrary, in no event shall delivery of a notice of non-renewal by the Company be deemed a termination without Cause. The date that the Employment Period is terminated for any reason is referred to herein as the “Termination Date.”

4. Base Salary and Benefits.

5. Severance.

6. Confidential Information. Executive acknowledges that the information, observations and data (including without limitation trade secrets, know-how, research plans, business, accounting, distribution and sales methods and systems, sales and profit figures and margins and other technical or business information, business, marketing and sales plans and strategies, cost and pricing structures, and information concerning acquisition opportunities and targets nationwide in or reasonably related to any business or industry in which any of Holdings or the Company or their respective Subsidiaries is engaged) disclosed or otherwise revealed to him, or discovered or otherwise obtained by him or of which he becomes aware, directly or indirectly, while employed by the Company or its Subsidiaries (including, in each case, those obtained prior to the date of this Agreement) concerning the business or affairs of Holdings or the Company or any of their respective Subsidiaries (collectively, “Confidential Information”) are the property of Holdings or the Company or their respective Subsidiaries, as the case may be, and agrees that Holdings and Company have a protectable interest in such Confidential Information. Therefore, Executive agrees that he shall not (during his employment with the Company or at any time thereafter) disclose to any unauthorized person or use for his own purposes any Confidential Information without the prior written consent of the Board, unless and to the extent that the aforementioned matters: (a) become or are generally known to and available for use by the public other than as a result of Executive’s acts or omissions or (b) are required to be disclosed by judicial process or law (provided that Executive shall give prompt advance written notice of such requirement to the Company to enable the Company to seek an appropriate protective order or confidential treatment). Executive shall deliver to the Company at the termination of the Employment Period, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes, printouts and software and other documents and data (and copies thereof) which constitute Confidential Information or Work Product (as defined below) which he may then possess or have under his control.

7. Work Product. Executive hereby assigns to the Company all right, title and interest in and to all inventions, developments, methods, process, designs, analyses, reports and all similar or related information (in each case whether or not patentable), all copyrightable works, all trade secrets, confidential information and know-how, and all other intellectual property rights that both (a) are conceived, reduced to practice, developed or made by Executive while employed by the Company and its Subsidiaries and (b) either (i) relate to the Company’s or any of its Subsidiaries’ actual or anticipated business, research and development or existing or future products or services, or (ii) are conceived, reduced to practice, developed or made using any of equipment, supplies, facilities, assets or resources of the Company or any of its Subsidiaries (including but not limited to, any intellectual property rights) (“Work Product”). Executive shall promptly disclose such Work Product to the Board and perform all actions reasonably requested by the Board (whether during or after the Employment Period) to establish and confirm the Company’s ownership of the Work Product (including, without limitation, executing and delivering assignments, consents, powers of attorney, applications and other instruments).

8. Noncompetition. In further consideration of the compensation to be paid to Executive hereunder, Executive acknowledges that in the course of his employment with the Company and its Subsidiaries he has become and shall become familiar with the Company’s trade secrets and with other Confidential Information concerning the Company and its Subsidiaries and that his services have been and shall be of special, unique and extraordinary value to the Company and its Subsidiaries. Therefore, Executive agrees that, during the period of Executive’s employment with the Company and for 12 months thereafter (the “Noncompete Period”), he shall not, without prior written approval by the Board, directly or indirectly (whether for compensation or otherwise) own or hold any interest in, manage, operate, control, consult with, render services for, or in any manner participate in any business which competes with the businesses of the Company or its Subsidiaries conducted or proposed to be conducted during the Employment Period (collectively, the “Business”), either as a general or limited partner, proprietor, common or preferred shareholder, officer, director, agent, employee, consultant, trustee, affiliate or otherwise. Executive acknowledges that the Company’s and its Subsidiaries’ businesses are planned to be conducted nationally and internationally and agrees that the provisions in this Section 8 shall operate in the market areas of the United States and outside the United States in which the Company conducts or plans to conduct business on and prior to the Termination Date. Nothing in this Section 8 shall prohibit Executive from being a passive owner of not more than 2% of the outstanding securities of any publicly traded company engaged in the Business, so long as Executive has no active participation in the business of such company.

9. Non-Solicitation. During the Noncompete Period, Executive shall not directly or indirectly through another entity (i) induce or attempt to induce any employee of the Company or any Subsidiary to leave the employ of the Company or such Subsidiary, or in any way interfere with the relationship between the Company or any Subsidiary and any employee thereof, (ii) solicit to hire any person who was an employee of the Company or any Subsidiary at any time during the 12 months preceding the termination of the Employment Period or (iii) induce or attempt to induce any customer, developer, client, member, supplier, licensee, licensor, franchisee or other business relation of the Company or any Subsidiary to cease doing business with the Company or such Subsidiary, or in any way interfere with the relationship between any such customer, developer, client, member, supplier, licensee, licensor, franchisee or business relation and the Company or any Subsidiary (including, without limitation, making any negative statements or communications about the Company or its Subsidiaries).

10. Enforcement. If, at the time of enforcement of any of Sections 6 through 9, a court of competent jurisdiction shall hold that the period, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed and directed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by applicable law. The parties hereto acknowledge and agree that Executive’s services are unique and he has access to Confidential Information and Work Product, that the provisions of Sections 6 through 9 are necessary, reasonable and appropriate for the protection of the legitimate business interests of Holdings and the Company and their respective Subsidiaries, that irreparable injury will result to Holdings and the Company and their respective Subsidiaries if Executive breaches any of the

provisions of Sections 6 through 9 and that money damages would not be an adequate remedy for any breach by Executive of this Agreement and that neither Holdings nor the Company will have any adequate remedy at law for any such breach. Therefore, in the event of a breach or threatened breach of this Agreement, Holdings or the Company or any of their successors or assigns, in addition to other rights and remedies existing in their favor, shall be entitled to specific performance and/or immediate injunctive or other equitable relief from any court of competent jurisdiction in order to enforce or prevent any violations of the provisions hereof (without the necessity of showing actual money damages, or posting a bond or other security). Nothing contained herein shall be construed as prohibiting Holdings or the Company or any of their successors or assigns from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of damages.

11. Executive’s Representations and Acknowledgements. Executive hereby represents and warrants to Holdings and the Company that (i) the execution, delivery and performance of this Agreement by Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other Person, other than a noncompete agreement with TB Wood’s Incorporated, (iii) Executive shall not use any confidential information or trade secrets of any third party in connection with the performance of his duties hereunder, and (iv) this Agreement constitutes the valid and binding obligation of Executive, enforceable against Executive in accordance with its terms. Executive hereby acknowledges and represents that he has consulted with independent legal counsel regarding his rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein and intends for such terms and conditions to be binding on and enforceable against Executive. Executive acknowledges and agrees that the provisions of Sections 6 through 9 are in consideration of: (i) Genstar’s commitment to invest in Holdings; (ii) Executive’s employment by the Company; and (iii) additional good and valuable consideration as set forth in this Agreement, the receipt and sufficiency of which are hereby acknowledged. Executive expressly agrees and acknowledges that the restrictions contained in Sections 6 through 9 do not preclude Executive from earning a livelihood, nor do they unreasonably impose limitations on Executive’s ability to earn a living. In addition, Executive agrees and acknowledges that the potential harm to the Company of its non-enforcement outweighs any harm to Executive of its enforcement by injunction or otherwise. Executive acknowledges that he has carefully read this Agreement and has given careful consideration to the restraints imposed upon Executive by this Agreement, and is in full accord as to their necessity for the reasonable and proper protection of the Confidential Information. Executive expressly acknowledges and agrees that each and every restraint imposed by this Agreement is reasonable with respect to subject matter, time period and geographical area.

12. Definitions.

13. Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, mailed by first class mail (postage prepaid and return receipt requested), sent by reputable overnight courier service (charges prepaid), or faxed to the recipient at the address below indicated:

14. General Provisions.

1. Employment. The Company shall employ Executive, and Executive hereby agrees to be employed by the Company, upon the terms and conditions set forth in this Agreement for the period beginning on the Effective Date and ending as provided in Section 3 hereof (the “Employment Period”).

2. Position and Duties.

3. Termination. The Employment Period shall terminate on the fifth anniversary of the Effective Date (the “Expiration Date”). Notwithstanding the foregoing, the Company and Executive agree that Executive is an “at-will” employee, subject only to the contractual rights upon termination set forth herein, and that the Employment Period (a) shall terminate automatically at any time upon Executive’s death, (b) shall terminate automatically at any time upon the Board’s determination of Executive’s Disability, (c) may be terminated by the Board or by the Chief Executive Officer (after consultation with the Board) at any time for any reason or no reason (whether for Cause or without Cause) by giving Executive written notice of the termination, and (d) may be terminated by Executive for any reason or no reason (including for Good Reason) by giving the Company written notice at least 30 days in advance of his termination date. Notwithstanding anything herein to the contrary, if the Expiration Date occurs and this Agreement terminates automatically pursuant to this Section 3 because the Company and Executive have not extended the Expiration Date beyond the initial five-year period by means of an amendment to this Agreement, the obligations of Executive under Section 8 (Noncompetition) shall terminate on the Expiration Date; provided, however, that the obligations

of Executive under Section 8 (Noncompetition) shall survive the Expiration Date and be enforceable thereafter during the Noncompete Period (as defined in Section 8) in the event the Company elects, in its sole and absolute discretion, to pay Executive the severance benefits described in Section 5(a) of this Agreement (in which event the Executive shall execute and deliver the release contemplated therein). The Company undertakes to advise Executive at least six months prior to the Expiration Date whether it intends to enter into discussions with Executive with respect to an extension, renegotiation or amendment of this Agreement beyond the Expiration Date if Executive requests such indication in writing to the Company at least seven months and no more than twelve months prior to the Expiration Date. The date that the Employment Period is terminated for any reason is referred to herein as the “Termination Date.”

4. Base Salary and Benefits.

5. Severance.

6. Confidential Information. Executive acknowledges that the information, observations and data (including without limitation trade secrets, know-how, research plans, business, accounting, distribution and sales methods and systems, sales and profit figures and margins and other technical or business information, business, marketing and sales plans and strategies, cost and pricing structures, and information concerning acquisition opportunities and targets nationwide in or reasonably related to any business or industry in which any of Holdings or the Company or their respective Subsidiaries is engaged) disclosed or otherwise revealed to him, or discovered or otherwise obtained by him or of which he becomes aware, directly or indirectly, while employed by the Company or its Subsidiaries (including, in each case, those obtained prior to the date of this Agreement) concerning the business or affairs of Holdings or the Company or any of their respective Subsidiaries (collectively, “Confidential Information”) are the property of Holdings or the Company or their respective Subsidiaries, as the case may be, and agrees that Holdings and Company have a protectable interest in such Confidential Information. Therefore, Executive agrees that he shall not (during his employment with the Company or at any time thereafter) disclose to any unauthorized person or use for his own purposes any Confidential Information without the prior written consent of the Board, unless and to the extent that the aforementioned matters: (a) become or are generally known to and available for use by the public other than as a result of Executive’s acts or omissions or (b) are required to be disclosed by judicial process or law (provided that Executive shall give prompt advance written notice of such requirement to the Company to enable the Company to seek an appropriate protective order or confidential treatment). Executive shall deliver to the Company at the termination of the Employment Period, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes, printouts and software and other documents and data (and copies thereof) which constitute Confidential Information or Work Product (as defined below) which he may then possess or have under his control.

7. Work Product. Executive hereby assigns to the Company all right, title and interest in and to all inventions, developments, methods, process, designs, analyses, reports and all similar or related information (in each case whether or not patentable), all copyrightable works, all trade secrets, confidential information and know-how, and all other intellectual property rights that both (a) are conceived, reduced to practice, developed or made by Executive

while employed by the Company and its Subsidiaries and (b) either (i) relate to the Company’s or any of its Subsidiaries’ actual or anticipated business, research and development or existing or future products or services, or (ii) are conceived, reduced to practice, developed or made using any of equipment, supplies, facilities, assets or resources of the Company or any of its Subsidiaries (including but not limited to, any intellectual property rights) (“Work Product”). Executive shall promptly disclose such Work Product to the Board and perform all actions reasonably requested by the Board (whether during or after the Employment Period) to establish and confirm the Company’s ownership of the Work Product (including, without limitation, executing and delivering assignments, consents, powers of attorney, applications and other instruments).

8. Noncompetition. In further consideration of the compensation to be paid to Executive hereunder, Executive acknowledges that in the course of his employment with the Company and its Subsidiaries he has become and shall become familiar with the Company’s trade secrets and with other Confidential Information concerning the Company and its Subsidiaries and that his services have been and shall be of special, unique and extraordinary value to the Company and its Subsidiaries. Therefore, Executive agrees that, during the period of Executive’s employment with the Company and for 12 months thereafter (the “Noncompete Period”), he shall not, without prior written approval by the Board, directly or indirectly (whether for compensation or otherwise) own or hold any interest in, manage, operate, control, consult with, render services for, or in any manner participate in any business which competes in any material respect with the businesses of the Company or its Subsidiaries conducted or proposed to be conducted during the Employment Period (collectively, the “Business”), either as a general or limited partner, proprietor, common or preferred shareholder, officer, director, agent, employee, consultant, trustee, affiliate or otherwise. Executive acknowledges that the Company’s and its Subsidiaries’ businesses are planned to be conducted nationally and internationally and agrees that the provisions in this Section 8 shall operate in the market areas of the United States and outside the United States in which the Company conducts or plans to conduct business on and prior to the Termination Date. Nothing in this Section 8 shall prohibit Executive from being a passive owner of not more than 2% of the outstanding securities of any publicly traded company engaged in the Business, so long as Executive has no active participation in the business of such company.

9. Non-Solicitation. During the Noncompete Period, Executive shall not directly or indirectly through another entity (i) induce or attempt to induce any employee of the Company or any Subsidiary to leave the employ of the Company or such Subsidiary, or in any way interfere with the relationship between the Company or any Subsidiary and any employee thereof, (ii) solicit to hire any person who was an employee of the Company or any Subsidiary at any time during the 12 months preceding the termination of the Employment Period or (iii) induce or attempt to induce any customer, developer, client, member, supplier, licensee, licensor, franchisee or other business relation of the Company or any Subsidiary to cease doing business with the Company or such Subsidiary, or in any way interfere with the relationship between any such customer, developer, client, member, supplier, licensee, licensor, franchisee or business relation and the Company or any Subsidiary (including, without limitation, making any negative statements or communications about the Company or its Subsidiaries).

10. Enforcement. If, at the time of enforcement of any of Sections 6 through 9, a court of competent jurisdiction shall hold that the period, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed and directed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by applicable law. The parties hereto acknowledge and agree that Executive’s services are unique and he has access to Confidential Information and Work Product, that the provisions of Sections 6 through 9 are necessary, reasonable and appropriate for the protection of the legitimate business interests of Holdings and the Company and their respective Subsidiaries, that irreparable injury will result to Holdings and the Company and their respective Subsidiaries if Executive breaches any of the provisions of Sections 6 through 9 and that money damages would not be an adequate remedy for any breach by Executive of this Agreement and that neither Holdings nor the Company will have any adequate remedy at law for any such breach. Therefore, in the event of a breach or threatened breach of this Agreement, Holdings or the Company or any of their successors or assigns, in addition to other rights and remedies existing in their favor, shall be entitled to specific performance and/or immediate injunctive or other equitable relief from any court of competent jurisdiction in order to enforce or prevent any violations of the provisions hereof (without the necessity of showing actual money damages, or posting a bond or other security). Nothing contained herein shall be construed as prohibiting Holdings or the Company or any of their successors or assigns from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of damages.

11. Executive’s Representations and Acknowledgements. Executive hereby represents and warrants to Holdings and the Company that (i) the execution, delivery and performance of this Agreement by Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other Person (other than his confidentiality and noncompete agreements with Kaydon), (iii) Executive shall not use any confidential information or trade secrets of any third party in connection with the performance of his duties hereunder, and (iv) this Agreement constitutes the valid and binding obligation of Executive, enforceable against Executive in accordance with its terms. Executive hereby acknowledges and represents that he has consulted with independent legal counsel regarding his rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein and intends for such terms and conditions to be binding on and enforceable against Executive. Executive acknowledges and agrees that the provisions of Sections 6 through 9 are in consideration of: (i) Executive’s employment by the Company; and (ii) additional good and valuable consideration as set forth in this Agreement, the receipt and sufficiency of which are hereby acknowledged. Executive expressly agrees and acknowledges that the restrictions contained in Sections 6 through 9 do not preclude Executive from earning a livelihood, nor do they unreasonably impose limitations on Executive’s ability to earn a living. In addition, Executive agrees and acknowledges that the potential harm to the Company of its non-enforcement outweighs any harm to Executive of its enforcement by injunction or otherwise. Executive acknowledges that he has carefully read this Agreement and

has given careful consideration to the restraints imposed upon Executive by this Agreement, and is in full accord as to their necessity for the reasonable and proper protection of the Confidential Information. Executive expressly acknowledges and agrees that each and every restraint imposed by this Agreement is reasonable with respect to subject matter, time period and geographical area.

12. Definitions.

13. Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, mailed by first class mail (postage prepaid and return receipt requested), sent by reputable overnight courier service (charges prepaid), or faxed to the recipient at the address below indicated:

14. General Provisions.

1. Employment. The Company shall employ Executive, and Executive hereby agrees to be employed by the Company, upon the terms and conditions set forth in this Agreement for the period beginning on the Effective Date and ending as provided in Section 3 hereof (the “Employment Period”).

2. Position and Duties.

3. Termination. The Employment Period shall terminate on the fifth anniversary of the Effective Date (the “Expiration Date”). Notwithstanding the foregoing, the Company and Executive agree that Executive is an “at-will” employee, subject only to the contractual rights upon termination set forth herein, and that the Employment Period (a) shall terminate automatically at any time upon Executive’s death, (b) shall terminate automatically at any time upon the Board’s determination of Executive’s Disability, (c) may be terminated by the Board or by the Chief Executive Officer (after consultation with the Board) at any time for any reason or no reason (whether for Cause or without Cause) by giving Executive written notice of the termination, and (d) may be terminated by Executive for any reason or no reason (including for Good Reason) by giving the Company written notice at least 30 days in advance of his termination date. Notwithstanding anything herein to the contrary, if the Expiration Date occurs and this Agreement terminates automatically pursuant to this Section 3 because the Company and Executive have not extended the Expiration Date beyond the initial five-year period by means of an amendment to this Agreement, the obligations of Executive under Section 8 (Noncompetition) shall terminate on the Expiration Date; provided, however, that the obligations

of Executive under Section 8 (Noncompetition) shall survive the Expiration Date and be enforceable thereafter during the Noncompete Period (as defined in Section 8) in the event the Company elects, in its sole and absolute discretion, to pay Executive the severance benefits described in Section 5(a) of this Agreement (in which event the Executive shall execute and deliver the release contemplated therein). The Company undertakes to advise Executive at least six months prior to the Expiration Date whether it intends to enter into discussions with Executive with respect to an extension, renegotiation or amendment of this Agreement beyond the Expiration Date if Executive requests such indication in writing to the Company at least seven months and no more than twelve months prior to the Expiration Date. The date that the Employment Period is terminated for any reason is referred to herein as the “Termination Date.”

4. Base Salary and Benefits.

5. Severance.

6. Confidential Information. Executive acknowledges that the information, observations and data (including without limitation trade secrets, know-how, research plans, business, accounting, distribution and sales methods and systems, sales and profit figures and margins and other technical or business information, business, marketing and sales plans and strategies, cost and pricing structures, and information concerning acquisition opportunities and targets nationwide in or reasonably related to any business or industry in which any of Holdings or the Company or their respective Subsidiaries is engaged) disclosed or otherwise revealed to him, or discovered or otherwise obtained by him or of which he becomes aware, directly or indirectly, while employed by the Company or its Subsidiaries (including, in each case, those obtained prior to the date of this Agreement) concerning the business or affairs of Holdings or the Company or any of their respective Subsidiaries (collectively, “Confidential Information”) are the property of Holdings or the Company or their respective Subsidiaries, as the case may be, and agrees that Holdings and Company have a protectable interest in such Confidential Information. Therefore, Executive agrees that he shall not (during his employment with the Company or at any time thereafter) disclose to any unauthorized person or use for his own purposes any Confidential Information without the prior written consent of the Board, unless and to the extent that the aforementioned matters: (a) become or are generally known to and available for use by the public other than as a result of Executive’s acts or omissions or (b) are required to be disclosed by judicial process or law (provided that Executive shall give prompt advance written notice of such requirement to the Company to enable the Company to seek an appropriate protective order or confidential treatment). Executive shall deliver to the Company at the termination of the Employment Period, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes, printouts and software and other documents and data (and copies thereof) which constitute Confidential Information or Work Product (as defined below) which he may then possess or have under his control.

7. Work Product. Executive hereby assigns to the Company all right, title and interest in and to all inventions, developments, methods, process, designs, analyses, reports and all similar or related information (in each case whether or not patentable), all copyrightable works, all trade secrets, confidential information and know-how, and all other intellectual property rights that both (a) are conceived, reduced to practice, developed or made by Executive while employed by the Company and its Subsidiaries and (b) either (i) relate to the Company’s or any of its Subsidiaries’ actual or anticipated business, research and development or existing or future products or services, or (ii) are conceived, reduced to practice, developed or made using any of equipment, supplies, facilities, assets or resources of the Company or any of its Subsidiaries (including but not limited to, any intellectual property rights) (“Work Product”). Executive shall promptly disclose such Work Product to the Board and perform all actions reasonably requested by the Board (whether during or after the Employment Period) to establish and confirm the Company’s ownership of the Work Product (including, without limitation, executing and delivering assignments, consents, powers of attorney, applications and other instruments).

8. Noncompetition. In further consideration of the compensation to be paid to Executive hereunder, Executive acknowledges that in the course of his employment with the Company and its Subsidiaries he has become and shall become familiar with the Company’s trade secrets and with other Confidential Information concerning the Company and its Subsidiaries and that his services have been and shall be of special, unique and extraordinary value to the Company and its Subsidiaries. Therefore, Executive agrees that, during the period of Executive’s employment with the Company and for 12 months thereafter (the “Noncompete Period”), he shall not, without prior written approval by the Board, directly or indirectly (whether for compensation or otherwise) own or hold any interest in, manage, operate, control, consult with, render services for, or in any manner participate in any business which competes in any material respect with the businesses of the Company or its Subsidiaries conducted or proposed to be conducted during the Employment Period (collectively, the “Business”), either as a general or limited partner, proprietor, common or preferred shareholder, officer, director, agent, employee, consultant, trustee, affiliate or otherwise. Executive acknowledges that the Company’s and its Subsidiaries’ businesses are planned to be conducted nationally and internationally and agrees that the provisions in this Section 8 shall operate in the market areas of the United States and outside the United States in which the Company conducts or plans to conduct business on and prior to the Termination Date. Nothing in this Section 8 shall prohibit Executive from being a passive owner of not more than 2% of the outstanding securities of any publicly traded company engaged in the Business, so long as Executive has no active participation in the business of such company.

9. Non-Solicitation. During the Noncompete Period, Executive shall not directly or indirectly through another entity (i) induce or attempt to induce any employee of the Company or any Subsidiary to leave the employ of the Company or such Subsidiary, or in any way interfere with the relationship between the Company or any Subsidiary and any employee thereof, (ii) solicit to hire any person who was an employee of the Company or any Subsidiary at any time during the 12 months preceding the termination of the Employment Period or (iii) induce or attempt to induce any customer, developer, client, member, supplier, licensee, licensor,

franchisee or other business relation of the Company or any Subsidiary to cease doing business with the Company or such Subsidiary, or in any way interfere with the relationship between any such customer, developer, client, member, supplier, licensee, licensor, franchisee or business relation and the Company or any Subsidiary (including, without limitation, making any negative statements or communications about the Company or its Subsidiaries).

10. Enforcement. If, at the time of enforcement of any of Sections 6 through 9, a court of competent jurisdiction shall hold that the period, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed and directed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by applicable law. The parties hereto acknowledge and agree that Executive’s services are unique and he has access to Confidential Information and Work Product, that the provisions of Sections 6 through 9 are necessary, reasonable and appropriate for the protection of the legitimate business interests of Holdings and the Company and their respective Subsidiaries, that irreparable injury will result to Holdings and the Company and their respective Subsidiaries if Executive breaches any of the provisions of Sections 6 through 9 and that money damages would not be an adequate remedy for any breach by Executive of this Agreement and that neither Holdings nor the Company will have any adequate remedy at law for any such breach. Therefore, in the event of a breach or threatened breach of this Agreement, Holdings or the Company or any of their successors or assigns, in addition to other rights and remedies existing in their favor, shall be entitled to specific performance and/or immediate injunctive or other equitable relief from any court of competent jurisdiction in order to enforce or prevent any violations of the provisions hereof (without the necessity of showing actual money damages, or posting a bond or other security). Nothing contained herein shall be construed as prohibiting Holdings or the Company or any of their successors or assigns from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of damages.

11. Executive’s Representations and Acknowledgements. Executive hereby represents and warrants to Holdings and the Company that (i) the execution, delivery and performance of this Agreement by Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other Person, (iii) Executive shall not use any confidential information or trade secrets of any third party in connection with the performance of his duties hereunder, and (iv) this Agreement constitutes the valid and binding obligation of Executive, enforceable against Executive in accordance with its terms. Executive hereby acknowledges and represents that he has consulted with independent legal counsel regarding his rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein and intends for such terms and conditions to be binding on and enforceable against Executive. Executive acknowledges and agrees that the provisions of Sections 6 through 9 are in consideration of: (i) Executive’s employment by the Company; and (ii) additional good and valuable consideration as set forth in this Agreement, the receipt and sufficiency of which are hereby acknowledged. Executive

expressly agrees and acknowledges that the restrictions contained in Sections 6 through 9 do not preclude Executive from earning a livelihood, nor do they unreasonably impose limitations on Executive’s ability to earn a living. In addition, Executive agrees and acknowledges that the potential harm to the Company of its non-enforcement outweighs any harm to Executive of its enforcement by injunction or otherwise. Executive acknowledges that he has carefully read this Agreement and has given careful consideration to the restraints imposed upon Executive by this Agreement, and is in full accord as to their necessity for the reasonable and proper protection of the Confidential Information. Executive expressly acknowledges and agrees that each and every restraint imposed by this Agreement is reasonable with respect to subject matter, time period and geographical area.

12. Definitions.

13. Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, mailed by first class mail (postage prepaid and return receipt requested), sent by reputable overnight courier service (charges prepaid), or faxed to the recipient at the address below indicated:

14. General Provisions.

“Change of Control” means, whether in a single transaction or a series of related transactions (i) a sale of all or substantially all of the consolidated assets of the Company and its

Subsidiaries taken as a whole, (ii) a sale of Securities by the Company or the Genstar Parties resulting in more than 50% of the total voting power of all securityholders of the Company beneficially owned by a Person other than the Genstar Parties, or (iii) a merger or consolidation of the Company with or into another Person, if and only if, after such merger or consolidation, the Genstar Parties and its Affiliates do not have the ability to elect a majority of the board of directors of the surviving or resulting company.

“Independent Party” shall mean any person who is a bona fide purchaser and who, directly or indirectly, immediately prior to the proposed transaction, (i) holds less than 5% of the outstanding securities of the Company (on an as-converted to common stock basis) and (ii) is not an Affiliate of the Company or the Genstar Parties.

(a) General. Subject to the provisions of this Section 6, the Participant hereby grants, first, to the Company, and second, to the Genstar Parties, a right of first refusal (the “Right of First Refusal”) to purchase all of the Shares held by the Participant which such Participant proposes to Transfer, in compliance with the restrictions set forth herein, to a person other than the Company.

(b) Right of First Refusal. Subject to the limitations imposed by, and only upon compliance with, Section 5 hereof, in the event that the Participant receives a bona fide

offer (the “Offer”) to Transfer any or all of its Shares (the “Offer Shares”) from a Person other than the Company (the “Offeror”) which the Participant wishes to accept, the Participant shall cause the Offer to be put in writing and shall give the Company and the Genstar Parties written notice (the “Offer Notice”) of such Offer. The Offer Notice shall contain an irrevocable offer to sell the Offer Shares to the Company and the Genstar Parties, on the same terms and conditions as the Offer, and such Offer Notice shall be accompanied by a true copy of the Offer (which shall identify the Offeror). The Company shall have thirty (30) days from the delivery date of any Offer Notice to agree to purchase all of the Offer Shares either (i) at the same price and on the same terms and conditions as the Offer or (ii) if the Offer includes any consideration other than cash, then at the sole option of the Company, on the same terms and conditions as the Offer except at the equivalent all cash price, determined in good faith by the Board. If the Company fails to agree to purchase all of the Offer Shares within such thirty (30) day period, the Genstar Parties shall have fifteen (15) days from the expiration of the Company’s above-mentioned 30 day period to agree to purchase, or arrange for an Affiliate of the Genstar Parties to purchase all of the Offer Shares either (i) at the same price and on the same terms and conditions as the Offer, or (ii) if the Offer includes any consideration other than cash, then at the sole option of the Genstar Parties, on the same terms and conditions as the Offer except at the equivalent all cash price, determined in good faith by the Board.

(c) Failure to Exercise Right. If the Company and the Genstar Parties collectively fail to purchase all of the Offer Shares pursuant to Section 6(b), the Participant shall have sixty (60) days after the last date on which the Genstar Parties’ right to purchase the Offer Shares lapsed to Transfer the Offer Shares to the Offeror identified in the initial Offer Notice at a price equal to or above, and upon terms not more favorable to such Offeror than, the price and terms specified in the Offer given in connection with such Transfer; provided, however, that the Participant shall not be entitled to Transfer such Offer Shares (i) if the Offeror is a competitor, supplier or customer of the Company or any Subsidiary or if the Offeror is not reasonably acceptable to the Board, such determination to be made in good faith by the Board or (ii) if the Transfer occurs prior to the Qualified Public Offering, unless the Offeror agrees in writing to be bound by the provisions of this Agreement as if such Offeror were the Participant. In the event that the Participant has not Transferred the Offer Shares within such sixty (60) day period, the Participant shall not thereafter Transfer (except in a manner otherwise permitted under this Agreement) any of such Offer Shares without again complying with the provisions of this Agreement, including, if applicable, this Section 6.

(d) Exercise of Right of First Refusal. If the Company and/or the Genstar Parties exercises its Right of First Refusal, the closing of the purchase of the Offer Shares shall take place within thirty (30) days after the Company and/or the Genstar Parties gives notice of such exercise, which period of time shall be extended in order to comply with applicable laws and regulations. Upon exercise of such Right of First Refusal, the Company and/or the Genstar Parties and the Participant shall be legally obligated to consummate the purchase contemplated thereby and shall use their reasonable efforts to secure any approvals required in connection therewith.

(e) Exceptions to Right of First Refusal. The Right of First Refusal shall not apply to (i) Permitted Transfers made in compliance with this Agreement, (ii) Transfers pursuant

to Sections 7 or 8 of this Agreement, or (iii) any registered Public Offering in which such Offer Shares are included.

(f) Termination. The covenants and agreements set forth in this Section 6 shall terminate upon the consummation of a Qualified Public Offering.

(a) Sales by the Genstar Parties. Notwithstanding anything else herein to the contrary, if the Genstar Parties determine to sell or otherwise transfer any securities of the Company then held by the Genstar Parties to an Independent Party and such sale or transfer results in a Change of Control (a “Drag-Along Sale”), then upon the Genstar Parties’ request, the Participant shall sell to such proposed purchaser the Applicable Percentage of the Shares held by such Participant. The terms and conditions of such Drag-Along Sale shall be on the same terms and conditions (or no less favorable terms and conditions) as such sale or transfer by the Genstar Parties, including without limitation sale price with respect to the same type of securities, representations and warranties, covenants and indemnification obligations; provided, however, that if the holders of a class of securities of the Company are given an option under the agreement of sale to elect the form and amount of the consideration to be received in consideration for the sale or transfer of such securities, then each holder of such class of securities shall be given the same option.

(b) Notice. Prior to making any Drag-Along Sale, the Genstar Parties shall, if they determine that the Participant should participate in such sale or transfer, provide the Participant with written notice (the “Drag-Along Notice”) not less than ten (10) business days prior to the proposed date of the Drag-Along Sale (the “Drag-Along Sale Date”). The Drag-Along Notice shall set forth: (i) the name of the proposed purchaser; (ii) the proposed amount and form of consideration to be paid and the material terms and conditions of the sale or transfer and (iii) the Drag-Along Sale Date and the date upon which the Participant shall deliver to the Genstar Parties the certificates or instruments representing the Shares owned by the Participant, duly endorsed, and the limited power of attorney referred to below. The Participant shall deliver to the Genstar Parties the certificate(s) or instrument(s) representing its Shares, duly endorsed for transfer with signatures guaranteed, on or before the date set forth in the Drag-Along Notice for such delivery, together with a limited power of attorney authorizing the Genstar Parties to sell or otherwise dispose of such Shares pursuant to the term of such Drag-Along Sale and to execute on behalf of the Participant any purchase agreement or other documentation required to consummate such Drag-Along Sale.

(c) Effect of Drag-Along Sale. If a Participant receives the applicable purchase price from a Drag-Along Sale, but has failed to deliver certificates or instruments representing its Shares as described in this Section 7, it shall for all purposes no longer be deemed to be a securityholder of the Company with respect to the Shares for which the purchase price has been received, and with respect to such Shares it shall have no voting rights, shall not be entitled to any dividends or other distributions with respect to such Shares and shall have no other rights or privileges granted to securityholders with respect to such Shares under law or this Agreement.

(d) Sale of the Company. If a Drag-Along Sale is to be effected in the form of a merger or other corporate reorganization which requires stockholder approval, and if the Board approves the Drag-Along Sale (an “Approved Sale”), the Participant shall vote for, consent to and raise no objections against such Approved Sale and the Participant shall waive any dissenters’ rights, appraisal rights or similar rights in connection with such Approved Sale. The Participant shall take all necessary or desirable actions in connection with the consummation of the Approved Sale and the distribution of the aggregate consideration from such Approved Sale as reasonably requested by the Company.

(e) Termination. The covenants and agreements set forth in this Section 7 shall terminate upon the consummation of a Qualified Public Offering.

(a) Right of Repurchase Upon Termination of Employment. If a Participant’s employment with the Company and its Subsidiaries is terminated, voluntarily or involuntarily, for any reason, first, the Company, and second, the Genstar Parties, shall have the exclusive and irrevocable right (which shall not be an obligation) to repurchase (the “Right of Repurchase”), for a period of ninety (90) days from the effective date of termination, all or any portion of the Released Shares held by the Participant, free and clear of all liens, pledges, security interests and other encumbrances and restrictions, at a purchase price per share equal to the purchase price as determined in accordance with Section 8(c) below (the “Repurchase Price”).

(b) Repurchase Procedure. If the Company or the Genstar Parties, as the case may be, elect to exercise the Right of Repurchase with respect to a Participant’s Released Shares pursuant to this Section 8, it shall deliver written notice to such Participant within such 90-day period setting forth the terms of the repurchase pursuant to which such repurchase is being made. The Company or the Genstar Parties, as the case may be, shall pay the Repurchase Price in cash upon the closing of the transaction (which shall occur within such 90-day period, which period of time shall be extended in order to comply with applicable laws and regulations), and the Participant shall promptly, upon receipt of such repurchase price, (i) endorse and deliver to the Company or the Genstar Parties, as the case may be, the certificate(s) or instrument(s) representing the Released Shares so repurchased, free and clear of all liens, pledges, security interests and other encumbrances and restrictions, and (ii) represent and warrant to the Company or the Genstar Parties, as the case may be, to its title and ownership of such Shares, free and clear of liens or encumbrances, and its authority to sell such Shares.

(c) Purchase Price. In the event that a Participant’s employment with the Company and any Subsidiary is terminated for Cause, the Repurchase Price shall equal the lower of (i) the amount paid by such Participant to acquire the Released Shares, or if no cash consideration was paid, $0.01 per share and (ii) the then current Fair Market Value of such Released Shares. In the event that a Participant’s employment with the Company and its Subsidiaries is terminated for any reason other than for Cause, the Repurchase Price shall be the then current Fair Market Value of the Released Shares subject to repurchase.

(d) Rights as Stockholders. Once the Company or the Genstar Parties, as the case may be, has exercised its Right of Repurchase with respect to a Participant’s Released

Shares, the Participant shall have no rights with respect to such Released Shares except to receive the Repurchase Price. If the Company has exercised its Right of Repurchase it shall not consider such Released Shares outstanding for purposes of paying dividends, taking votes, or for any other purposes.

(e) Termination. The covenants and agreements set forth in this Section 8 shall terminate upon the consummation of a Qualified Public Offering.

(a) Investment Intent. This Agreement is made with Purchaser in reliance upon Purchaser’s representation to the Company, which by Purchaser’s acceptance hereof Purchaser confirms, that the Stock has been acquired with Purchaser’s own funds for investment for an indefinite period for Purchaser’s own account, not as a nominee or agent, and not with a view to the sale or distribution of any part thereof, and that Purchaser has no present intention of selling, granting participation in, or otherwise distributing the same. By executing this Agreement, Purchaser further represents that Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer, or grant participations, to such person or to any third person, with respect to any of the Stock.

(b) Restricted Securities. Purchaser understands that the Stock has not been registered under the Act, on the ground that the sale provided for in this Agreement is exempt from the registration requirements of the Act, and that the Company’s reliance on such exemption is predicated on Purchaser’s representations set forth herein.

(c) Investment Experience. In connection with the investment representations made herein, Purchaser represents that Purchaser is able to fend for itself in the transactions contemplated by this Agreement, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of Purchaser’s investment, has the ability to bear the economic risks of Purchaser’s investment and has been furnished with and has had access to such information as Purchaser has requested and deems appropriate to Purchaser’s investment decision.

(d) Legends. All certificates representing any shares of Stock of the Company subject to the provisions of this Agreement shall have endorsed thereon the following legends:

(a) Further Instruments and Actions. The parties agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement.

(b) Notices. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to the other party at the address hereinafter shown below such party’s signature or at such other address as such party may designate by ten (10) days’ advance written notice to the other party to this Agreement.

(c) Governing Law, Assignment and Enforcement. This Agreement is governed by the laws of Delaware without regard to its choice of law rules and shall inure to the benefit of the successors and assigns of the Company and be binding upon Purchaser, Purchaser’s heirs, executors, administrators, guardians, successors and assigns. The prevailing party in any action to enforce this Agreement shall be entitled to attorneys’ fees and costs. The

parties agree that damages are not an adequate remedy for Purchaser’s breach hereof and the Company shall accordingly be entitled to specific performance of this Agreement.

(d) Amendments and Waivers. This Agreement represents the entire understanding of the parties with respect to the subject matter hereof and supersedes all previous understandings, written or oral. This Agreement may only be amended with the written consent of the parties or the successors or assigns of the foregoing, and no oral waiver or amendment shall be effective under any circumstances whatsoever.

(e) Cooperation. Purchaser agrees to cooperate affirmatively with the Company, to the extent reasonably requested by the Company, to enforce rights and obligations pursuant to this Agreement.

1. Dividend Provisions.

2. Liquidation Preference.

3. Redemption. The Preferred Stock is not redeemable.

4. Conversion. The holders of the Series A Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

5. Voting Rights. Except as otherwise expressly provided herein or as required by law, the holders of Series A Preferred Stock and the holders of Common Stock shall vote together and not as separate classes. The holder of each share of Series A Preferred Stock shall have the right to one vote for each share of Common Stock into which such Preferred Stock could then be converted, and with respect to such vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and shall be entitled, notwithstanding any provision hereof, to notice of any stockholders’ meeting in accordance with the bylaws of this corporation, and shall be entitled to vote, together with holders of Common Stock, with respect to any question upon which holders of Common Stock have the right to vote. Fractional votes shall not, however, be permitted and any fractional voting rights available on an as-converted basis (after aggregating all shares into which shares of Series A Preferred Stock held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward).

6. Protective Provisions. So long as any shares of Series A Preferred Stock are outstanding, this corporation shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then outstanding shares of Preferred Stock, voting together as a class:

7. Status of Converted Stock. In the event any shares of Preferred Stock shall be converted pursuant to Section 4 hereof, the shares so converted shall be cancelled and shall not be issuable by this corporation. The Certificate of Incorporation of this corporation shall be appropriately amended to effect the corresponding reduction in this corporation’s authorized capital stock.

1. Dividend Rights. Subject to the prior rights of holders of all classes of stock at the time outstanding having prior rights as to dividends, the holders of the Common Stock shall be entitled to receive, when and as declared by the board of directors, out of any assets of this corporation legally available therefor, such dividends as may be declared from time to time by the board of directors.

2. Liquidation Rights. Upon the liquidation, dissolution or winding up of this corporation, the assets of this corporation shall be distributed as provided in Section 2 of Division (B) of this Article IV.

3. Redemption. The Common Stock is not redeemable.

4. Voting Rights. The holder of each share of Common Stock shall have the right to one vote, and shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of this corporation, and shall be entitled to vote upon such matters and in such manner as may be provided by law.

(a) (i) existing at the time such Person becomes a Restricted Subsidiary or at the time it merges or consolidates with or into the Company or any of its Restricted Subsidiaries or assumed in connection with the acquisition of assets from such Person or (ii) incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary upon the consummation of the acquisition of all or substantially all of the assets or all of the Capital Stock of such Person by the Company or any of its Restricted Subsidiaries; and

(b) that is without recourse to the Company or any of its Subsidiaries or to any of their respective properties or assets other than the Person or the assets to which such Indebtedness relates.

(a) a transaction or series of related transactions for which the Company or its Restricted Subsidiaries receive aggregate consideration of less than $2.5 million;

(b) the transfer of all or substantially all of the assets of the Company as permitted under Section 5.01;

(c) any Restricted Payment permitted under Section 4.09, or any Permitted Investment;

(d) the sale of Cash Equivalents;

(e) the creation of a Permitted Lien (but not the sale or other disposition of the property subject to such Lien); and

(f) a transfer to the Company or to a Guarantor.

(a) all income taxes paid or accrued in accordance with GAAP for such period;

(b) Consolidated Interest Expense and interest attributable to write-offs of deferred financing costs; and

(c) Consolidated Non-cash Charges less any non-cash items increasing Consolidated Net Income for such period.

(a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by

(b) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment.

(b) Transfers to QIBs. The following provisions shall apply with respect to the registration of any proposed transfer of a Note constituting a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):

(c) Private Placement Legend. Upon the transfer, exchange or replacement of Notes not bearing the Private Placement Legend, the Registrar shall deliver Notes that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Notes bearing the Private Placement Legend, the Registrar shall deliver only Notes that bear the Private Placement Legend unless (i) the circumstance contemplated by paragraph (a)(i)(x) of this Section 2.15 exists or (ii) an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act is delivered to the Registrar. The Registrar shall not register a transfer of any Note unless such transfer complies with the restrictions on transfer of such Note set forth in this Indenture. In connection with any transfer of Notes, each Holder agrees by its acceptance of the Notes to furnish the Registrar or the Company such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act; provided that the Registrar shall not be required to determine (but may rely on a determination made by the Company with respect to) the sufficiency of any such certifications, legal opinions or other information.

(d) General. By its acceptance of any Note bearing the Private Placement Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it shall transfer such Note only as provided in this Indenture.

(a) to repay any outstanding Indebtedness under the Credit Agreement and correspondingly reduce the commitments thereunder;

(b) to reinvest in property, plant, equipment or other long-term assets that replace the properties and assets that were the subject of such Asset Sale or that will be used or useful in the Permitted Business (including expenditures for maintenance, repair or improvement of existing properties and assets); or

(c) a combination of repayment and investment permitted by clauses (3)(a) and (3)(b).

(a) under applicable law, rule, regulation, order, license or permit;

(b) under the Indenture and the Collateral Agreements;

(c) by reason of customary non-assignment provisions of any lease of any Restricted Subsidiary to the extent such provisions restrict the transfer of the lease or the property leased thereunder;

(d) under any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired;

(e) under the Credit Agreement;

(f) by reason of restrictions on the transfer of assets subject to any Permitted Lien;

(g) under customary agreements to sell assets or Capital Stock permitted to be sold under the Indenture pending the closing of such sale;

(h) under Purchase Money Indebtedness or Capitalized Lease Obligations permitted under the Indenture; provided, that such encumbrances and restrictions relate only to the assets financed with such Indebtedness;

(i) by reason of restrictions on cash or other deposits under bona fide arrangements with customers entered into in the ordinary course of business, consistent with past practice;

(j) on any Foreign Restricted Subsidiary under Indebtedness of such Subsidiary permitted under the Indenture; or

(k) under Refinancing Indebtedness incurred to Refinance the Indebtedness referred to in clause (b), (d) or (e); provided, that the provisions relating to such encumbrance or restriction contained in any such Indebtedness are no more adverse to the Holders and no less favorable or more onerous to the Company and its Restricted Subsidiaries than the provisions relating to such encumbrance or restriction contained in agreements referred to in the Indebtedness being Refinanced.

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its Affiliates (each an “Affiliate Transaction”), other than:

(b) The restrictions set forth in the first paragraph of this covenant will not apply to the following transactions (collectively, “Permitted Affiliate Transactions”):

(a) The Company and each of its Domestic Restricted Subsidiaries shall deliver Mortgages with respect to the Company’s leasehold interests in the premises (the “Leased Premises”) occupied by the Company or such Domestic Restricted Subsidiary pursuant to leases entered into after the Issue Date (collectively, the “Leases,” and individually, a “Lease”).

(b) Prior to the effective date of any Lease, the Company and such Subsidiaries shall provide to the Trustee all of the items described in clauses (2) and (3) of Section 4.17 and in addition shall use their respective reasonable commercial efforts to obtain an agreement executed by the lessor under the Lease, whereby the lessor consents to the Mortgage and waives or subordinates its landlord Lien (whether granted by the instrument creating the leasehold estate or by applicable law), if any, and which shall be entered into by the Collateral Agent.

(c) Each of the Company and each of its Domestic Restricted Subsidiaries that is a lessee of, or becomes a lessee of, real property, is, and will be, required to use commercially reasonable efforts to deliver to the Collateral Agent a landlord waiver, substantially in the form attached as Exhibit F-1 hereto, executed by the lessor of such real property; provided that in the case where such lease is a lease in existence on the Issue Date, the Company or its Domestic Restricted Subsidiary that is the lessee thereunder shall be required to use such commercially reasonable efforts to deliver within ninety (90) days from the Issue Date.

(i) mail to each Holder a copy of the Prospectus forming part of the Exchange Registration Statement, together with an appropriate letter of transmittal that is an exhibit to the Exchange Registration Statement, and any related documents;

(ii) keep the Exchange Offer open for not less than 20 Business Days after the date notice thereof is mailed to the Holders (or longer if required by applicable law);

(iii) utilize the services of a depository for the Exchange Offer with an address in the Borough of Manhattan, the City of New York, which may be the Trustee or an affiliate thereof;

(iv) permit Holders to withdraw tendered Registrable Notes at any time prior to the close of business, New York time, on the last Business Day on which the Exchange Offer shall remain open; and

(v) otherwise comply in all material respects with all applicable laws.

(i) accept for exchange all Registrable Notes validly tendered pursuant to the Exchange Offer or the Private Exchange, as the case may be, and not validly withdrawn;

(ii) deliver to the Trustee for cancellation all Registrable Notes so accepted for exchange; and

(iii) cause the Trustee to authenticate and deliver promptly to each Holder tendering such Registrable Notes, Exchange Notes or Private Exchange Notes, as the case may be, equal in principal amount to the Notes of such Holder so accepted for exchange.

(i) if (A) neither the Exchange Registration Statement nor the Initial Shelf Registration has been filed on or prior to the Filing Date or (B) notwithstanding that the Exchange Offer has or will be consummated, the Company is required to file a Shelf Registration Statement and such Shelf Registration Statement in not filed on or prior to the date required under Section 3 of this Registration Rights Agreement, then Additional Interest shall accrue on the Notes over and above any stated interest at a rate of 0.25% per annum of the principal amount of such Notes for the first 90 days immediately following the Filing Date, such Additional Interest rate increasing by an additional 0.25% per annum at the beginning of each subsequent 90-day period;

(ii) if (A) neither the Exchange Registration Statement nor the Initial Shelf Registration is declared effective on or prior to the Effectiveness Date or (B) notwithstanding that the Exchange Offer has or will be consummated, the Company is required to file a Shelf Registration Statement and such Shelf Registration Statement is not declared effective by the SEC on or prior to the 90th day following the date such Shelf Registration Statement was filed, then, commencing on the day after either such required effective date, Additional Interest shall accrue on the Notes over and above any stated interest at a rate of 0.25% per annum of the principal amount of such Notes for the first 90 days immediately following the Effectiveness Date, such Additional Interest rate increasing by an additional 0.25% per annum at the beginning of each subsequent 90-day period;

(iii) if (A) the Company (and any Subsidiary Guarantor) has not exchanged Exchange Notes for all Notes validly tendered in accordance with the terms of the Exchange Offer on or prior to the 30^th Business Day after the Effectiveness Date or (B) if applicable, a Shelf Registration has been declared effective and such Shelf Registration ceases to be effective at any time prior to the second anniversary of the Closing Date (other than such time as all Notes have been disposed of thereunder) and is not declared effective again within 30 days, then Additional Interest shall accrue on the Notes, over and above any stated interest, at a rate of 0.25% per annum of the principal amount of such Notes for the first 90 days commencing on (x) the 31^st Business Day after the Effectiveness Date, in the case of (A)

above, or (y) the day such Shelf Registration ceases to be effective in the case of (B) above, such Additional Interest rate increasing by an additional 0.25% per annum at the beginning of each such subsequent 90-day period;

(i) if to a Holder of Securities or to any Participating Broker-Dealer, at the most current address of such Holder or Participating Broker-Dealer, as the case may be, set forth on the records of the registrar of the Notes, with a copy in like manner to the Initial Purchaser as follows:

(ii) if to the Initial Purchaser, at the address specified in Section 11(e)(i);

(iii) if to the Company or any Subsidiary Guarantor, as follows:

Article 7 – SENIORITY

Article 13 – NEW CLASSIFICATIONS

Article 15 – EQUAL EMPLOYMENT OPPORTUNITY

Article 21 – PERSONAL LEAVE OF ABSENCE

Article 22 – MEDICAL LEAVE OF ABSENCE

Article 25 – INSURANCE

Article 28 – WAGES

Article 30 - TERMINATION

(a) Position. During the Employment Period, Executive shall serve as the Chief Executive Officer of the Company and in such capacity shall have the duties, responsibilities and authority that are normally associated with such office, subject to the direction and supervision of the Board.

(b) Duties. Executive shall report to the Board, and Executive shall devote substantially all of his business time and attention (except for permitted vacation periods and periods of illness or incapacity and other activities approved by the Board from time to time) to the business and affairs of the Company and its Subsidiaries.

(a) Base Salary. During the Employment Period, Executive’s base salary shall be $350,000 per year (the “Base Salary”). The Base Salary shall be reviewed annually. The Base Salary shall not be reduced prior to the Expiration Date, and after any increase of such Base Salary approved by the Board, the term “Base Salary” in this Agreement shall refer to the Base Salary as so increased. The Base Salary shall be payable in regular installments in accordance with the Company’s general payroll practices.

(b) Performance Bonus. In addition to the Base Salary, Executive shall be eligible for an annual incentive bonus payment of up to 60% of his Base Salary (a “Performance Bonus”), in accordance with the Company’s bonus performance plan approved by the Board in its sole discretion. Executive shall only be eligible to receive a Performance Bonus at the end of such fiscal year if Executive remains employed by the Company through the last day of such fiscal year.

(c) Expenses. The Company will reimburse Executive for all reasonable travel and other business expenses incurred by Executive during the Employment Period in connection with the performance of his duties and obligations under this Agreement, subject to Executive’s compliance with such limitations and reporting requirements with respect to expenses as may be established by the Company from time to time.

(d) Other Benefits. During the Employment Period, Executive will be entitled to participate in all compensation or employee benefit plans or programs and receive all benefits and perquisites for which salaried employees of the Company generally are eligible under any plan or program now or established later by the Company on the same basis as other senior executives of the Company. Nothing in this Agreement will preclude the Company from amending or terminating any of the plans or programs applicable to salaried employees or senior executives as long as such amendment or termination is applicable to all salaried employees or all senior executives, as the case may be. Executive shall be entitled to six weeks of paid vacation each year, which may be taken in accordance with the Company’s vacation policy.

(e) Directorships. Each of the Company and Holdings shall take all actions necessary to elect the Executive to the Board and the Board of Directors of Holdings and to maintain the Executive’s position as a director during the Employment Period.

(f) Indemnification. To the fullest extent permitted by law and the certificate of incorporation of the Company, the Executive (and his heirs, executors and administrators) shall be indemnified by the Company and its successors and assigns. The obligations of the Company pursuant to this Section shall survive the termination of the Employment Period.

(a) Termination without Cause or for Good Reason. If, prior to the Expiration Date, the Employment Period is terminated by the Company without Cause or by the Executive for Good Reason, (i) Executive shall be entitled to receive for the Severance Period (A) his annual Base Salary as in effect immediately prior to the Termination Date paid in the same

manner and in the same installments as previously paid and (B) to the extent permitted by such plans as in effect on the Termination Date, at the Company’s expense the continuation of medical and dental benefits through the Severance Period and (ii) Executive (or his estate) shall be entitled to receive (A) all earned or accrued but unpaid Base Salary, reimbursement of expenses and any other benefits to which Executive is entitled through the Termination Date, (B) any Performance Bonus that was earned, but not paid, as of the Termination Date, and (C) all amounts or benefits to which Executive is entitled under any applicable employee-benefit plan or arrangement of the Company in which Executive was a participant during his employment with the Company, in accordance with the terms of such plan or arrangement. When used herein, the “Severance Period” means the 12-month period from and after the Termination Date. The Company’s obligations under this Section 5(a) shall be subject to the condition that Executive deliver a complete release in favor of Holdings and the Company and their respective Subsidiaries, affiliates, officers, directors, employees, principals and attorneys, in form and substance satisfactory to Holdings and the Company.

(b) Death or Disability. In the event of the death or Disability of Executive during the Employment Period, the Company’s obligation to make payments or provide any other benefits under this Agreement shall cease as of the date of death or Disability of Executive; provided that Executive (or his estate) shall be entitled to receive (i) all earned or accrued but unpaid Base Salary, reimbursement of expenses and any other benefits to which Executive is entitled through the Termination Date, (ii) any Performance Bonus that was earned, but not paid, as of the Termination Date, and (iii) all amounts or benefits to which Executive is entitled under any applicable employee-benefit plan or arrangement of the Company in which Executive was a participant during his employment with the Company, in accordance with the terms of such plan or arrangement.

(c) Other Termination. If the Employment Period is terminated by the Company for Cause or by Executive for any reason other than Good Reason, Executive shall not be entitled to any severance payments and all of Executive’s benefits shall cease to be effective immediately as of the Termination Date (except as required by law). All of Executive’s rights to fringe benefits and bonuses hereunder (if any) which accrue or become payable after the termination of the Employment Period shall cease upon such termination; provided that Executive (or his estate) shall be entitled to receive (x) all earned or accrued but unpaid Base Salary, reimbursement of expenses and any other benefits to which Executive is entitled through the Termination Date, (y) any Performance Bonus that was earned, but not paid, as of the Termination Date, and (z) all amounts or benefits to which Executive is entitled under any applicable employee-benefit plan or arrangement of the Company in which Executive was a participant during his employment with the Company, in accordance with the terms of such plan or arrangement.

(d) Other Benefits. Except as required by law or as specifically provided in this Section 5, the Company’s obligation to make any payments or provide any other benefits hereunder shall terminate automatically as of the Termination Date.

(e) Termination of Severance. If Executive breaches any of the provisions of Sections 6 through 9 hereof, the Company shall no longer be obligated to make any additional payments or provide any other benefits pursuant to this Section 5.

(a) Expenses. The Company, Holdings and Executive will each pay their own costs and expenses incurred in connection with the negotiation and execution of this Agreement and the agreements contemplated hereby.

(b) Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

(c) Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

(d) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

(e) Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by Executive, Holdings, the Company, Genstar and their respective successors and assigns, including any entity with which the Company may merge or consolidate or to which all or substantially all of its assets may be transferred; provided that the rights and obligations of Executive under this Agreement shall not be assignable.

(f) Governing Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.

(g) Remedies. Each of the parties to this Agreement shall be entitled to enforce his or its rights under this Agreement specifically, to recover damages and costs (including reasonable attorney’s fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages would not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement.

(h) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company, Holdings and Executive.

(i) Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or legal holiday in the state in which the Company’s chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday.

(j) No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

(a) Position. During the Employment Period, Executive shall serve as the President and Chief Operating Officer of the Company and in such capacity shall have the duties, responsibilities and authority that are normally associated with such office, subject to the direction and supervision of the Board. Executive shall report directly to the Chief Executive Officer.

(b) Duties. Executive shall devote substantially all of his business time and attention (except for permitted vacation periods and periods of illness or incapacity and other activities approved by the Board from time to time) to the business and affairs of the Company and its Subsidiaries.

(a) Base Salary. During the Employment Period, Executive’s base salary shall be $257,500 per year (the “Base Salary”). The Base Salary shall be reviewed annually. The Base Salary shall not be reduced prior to the Expiration Date, and after any increase of such Base Salary approved by the Board, the term “Base Salary” in this Agreement shall refer to the Base Salary as so increased. The Base Salary shall be payable in regular installments in accordance with the Company’s general payroll practices.

(b) Performance Bonus. In addition to the Base Salary, Executive shall be eligible for a maximum annual incentive target bonus payment of 50% of his Base Salary (a “Performance Bonus”), in accordance with the Company’s bonus performance plan approved by the Board in its sole discretion.

(c) Expenses. The Company will reimburse Executive for all reasonable travel and other business expenses incurred by Executive during the Employment Period in connection with the performance of his duties and obligations under this Agreement, subject to Executive’s compliance with such limitations and reporting requirements with respect to expenses as may be established by the Company from time to time.

(d) Other Benefits. During the Employment Period, Executive will be entitled to participate in all compensation or employee benefit plans or programs and receive all benefits and perquisites for which salaried employees of the Company generally are eligible under any plan or program now or established later by the Company on the same basis as other senior executives of the Company. Nothing in this Agreement will preclude the Company from amending or terminating any of the plans or programs applicable to salaried employees or senior executives as long as such amendment or termination is applicable to all salaried employees or all senior executives, as the case may be. Executive shall be entitled to four weeks of paid vacation each year, which may be taken in accordance with the Company’s vacation policy.

(e) Indemnification. To the fullest extent permitted by law and the certificate of incorporation of the Company, the Executive (and his heirs, executors and administrators) shall be indemnified by the Company and its successors and assigns. The obligations of the Company pursuant to this Section shall survive the termination of the Employment Period.

(a) Termination without Cause or for Good Reason. If, prior to the Expiration Date, the Employment Period is terminated by the Company without Cause or by the Executive for Good Reason, (i) Executive shall be entitled to receive for the Severance Period (A) his annual Base Salary as in effect immediately prior to the Termination Date paid in the same manner and in the same installments as previously paid and (B) to the extent permitted by such plans as in effect on the Termination Date, at the Company’s expense the continuation of medical and dental benefits through the Severance Period and (ii) Executive (or his estate) shall be entitled to receive (A) all earned or accrued but unpaid Base Salary, reimbursement of expenses and any other benefits to which Executive is entitled through the Termination Date, (B) any Performance Bonus that was earned, but not paid, as of, and pro rated through, the Termination Date, and (C) all amounts or benefits to which Executive is entitled under any applicable employee-benefit plan or arrangement of the Company in which Executive was a participant during his employment with the Company, in accordance with the terms of such plan or arrangement. When used herein, the “Severance Period” means the 12-month period from and after the Termination Date. The Company’s obligations under this Section 5(a) shall be subject to the condition that Executive deliver a complete release in favor of Holdings and the Company and their respective Subsidiaries, affiliates, officers, directors, employees, principals and attorneys, in form and substance satisfactory to Holdings and the Company.

(b) Death or Disability. In the event of the death or Disability of Executive during the Employment Period, the Company’s obligation to make payments or provide any other benefits under this Agreement shall cease as of the date of death or Disability of Executive; provided that Executive (or his estate) shall be entitled to receive (i) all earned or accrued but unpaid Base Salary, reimbursement of expenses and any other benefits to which Executive is entitled through the Termination Date, (ii) any Performance Bonus that was earned, but not paid, as of, and pro rated through, the Termination Date, and (iii) all amounts or benefits to which Executive is entitled under any applicable employee-benefit plan or arrangement of the Company in which Executive was a participant during his employment with the Company, in accordance with the terms of such plan or arrangement.

(c) Other Termination. If the Employment Period is terminated by the Company for Cause or by Executive for any reason other than Good Reason, Executive shall not be entitled to any severance payments and all of Executive’s benefits shall cease to be effective immediately as of the Termination Date (except as required by law). All of Executive’s rights to fringe benefits and bonuses hereunder (if any) which accrue or become payable after the termination of the Employment Period shall cease upon such termination; provided that Executive (or his estate) shall be entitled to receive (x) all earned or accrued but unpaid Base Salary, reimbursement of expenses and any other benefits to which Executive is entitled through the Termination Date, (y) any Performance Bonus that was earned, but not paid, as of, and pro rated through, the Termination Date, and (z) all amounts or benefits to which Executive is entitled under any applicable employee-benefit plan or arrangement of the Company in which Executive was a participant during his employment with the Company, in accordance with the terms of such plan or arrangement.

(d) Other Benefits. Except as required by law or as specifically provided in this Section 5, the Company’s obligation to make any payments or provide any other benefits hereunder shall terminate automatically as of the Termination Date.

(e) Termination of Severance. If Executive breaches any of the provisions of Sections 6 through 9 hereof, the Company shall no longer be obligated to make any additional payments or provide any other benefits pursuant to this Section 5.

(f) Pro Rated Performance Bonus. If Executive shall be entitled to any pro rated Performance Bonus pursuant to Section 5 (a), (b) or (c), the Company shall not be required to make payment to Executive of such pro rated Performance Bonus until such time that the Company makes payment of similar bonuses to other participants in the Company’s bonus performance plan after the completion of the fiscal year in which the bonuses were earned.

(a) Expenses. The Company, Holdings and Executive will each pay their own costs and expenses incurred in connection with the negotiation and execution of this Agreement and the agreements contemplated hereby.

(b) Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

(c) Complete Agreement. This Agreement, the offer letter from the Company to Executive (with respect to the contingent make-whole bonus, the relocation costs and the equity grant, subject to a vesting schedule), those documents expressly referred to herein and other documents of even date herewith, embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

(d) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

(e) Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by Executive, Holdings, the Company, Genstar and their respective successors and assigns, including any entity with which the Company may merge or consolidate or to which all or substantially all of its assets may be transferred; provided, however, that any such assignment by the Company shall include all rights and obligations hereunder, including the severance obligations provided in Section 5; and, provided further, that Executive shall not be entitled to assign his rights or obligations under this Agreement without the prior written consent of Holdings and the Company.

(f) Governing Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.

(g) Remedies. The parties hereto agree and acknowledge that money damages would not be an adequate remedy for any breach of the provisions of this Agreement

and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement.

(h) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company, Holdings and Executive.

(i) Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or legal holiday in the state in which the Company’s chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday.

(j) No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

(a) Position. During the Employment Period, Executive shall serve as the Chief Financial Officer of the Company and in such capacity shall have the duties, responsibilities and authority that are normally associated with such office, subject to the direction and supervision of the Board. Executive shall report directly to the Chief Executive Officer.

(b) Duties. Executive shall devote substantially all of his business time and attention (except for permitted vacation periods and periods of illness or incapacity and other activities approved by the Board from time to time) to the business and affairs of the Company and its Subsidiaries.

(a) Base Salary. During the Employment Period, Executive’s base salary shall be $215,000 per year (the “Base Salary”). The Base Salary shall be reviewed annually. The Base Salary shall not be reduced prior to the Expiration Date, and after any increase of such Base Salary approved by the Board, the term “Base Salary” in this Agreement shall refer to the Base Salary as so increased. The Base Salary shall be payable in regular installments in accordance with the Company’s general payroll practices.

(b) Performance Bonus. In addition to the Base Salary, Executive shall be eligible for a maximum annual incentive target bonus payment of 40% of his Base Salary (a “Performance Bonus”), in accordance with the Company’s bonus performance plan approved by the Board in its sole discretion.

(c) Special Signing Bonus. On the 90th day after the date of this Agreement, the Company shall pay to Executive a special one-time signing bonus of $10,000 if on such date Executive has been performing at a satisfactory level in his role as Chief Financial Officer, as determined by the Chief Executive Officer in his sole and absolute judgment.

(d) Expenses. The Company will reimburse Executive for all reasonable travel and other business expenses incurred by Executive during the Employment Period in connection with the performance of his duties and obligations under this Agreement, subject to Executive’s compliance with such limitations and reporting requirements with respect to expenses as may be established by the Company from time to time.

(e) Other Benefits. During the Employment Period, Executive will be entitled to participate in all compensation or employee benefit plans or programs and receive all benefits and perquisites for which salaried employees of the Company generally are eligible under any plan or program now or established later by the Company on the same basis as other senior executives of the Company. Nothing in this Agreement will preclude the Company from amending or terminating any of the plans or programs applicable to salaried employees or senior executives as long as such amendment or termination is applicable to all salaried employees or all senior executives, as the case may be. Executive shall be entitled to four weeks of paid vacation each year, which may be taken in accordance with the Company’s vacation policy.

(f) Indemnification. To the fullest extent permitted by law and the certificate of incorporation of the Company, the Executive (and his heirs, executors and administrators) shall be indemnified by the Company and its successors and assigns. The obligations of the Company pursuant to this Section shall survive the termination of the Employment Period.

(a) Termination without Cause or for Good Reason. If, prior to the Expiration Date, the Employment Period is terminated by the Company without Cause or by the Executive for Good Reason, (i) Executive shall be entitled to receive for the Severance Period (A) his annual Base Salary as in effect immediately prior to the Termination Date paid in the same manner and in the same installments as previously paid and (B) to the extent permitted by such plans as in effect on the Termination Date, at the Company’s expense the continuation of medical and dental benefits through the Severance Period and (ii) Executive (or his estate) shall be entitled to receive (A) all earned or accrued but unpaid Base Salary, reimbursement of expenses and any other benefits to which Executive is entitled through the Termination Date, (B) any Performance Bonus that was earned, but not paid, as of, and pro rated through, the Termination Date, and (C) all amounts or benefits to which Executive is entitled under any applicable employee-benefit plan or arrangement of the Company in which Executive was a participant during his employment with the Company, in accordance with the terms of such plan or arrangement. When used herein, the “Severance Period” means the 12-month period from and after the Termination Date. The Company’s obligations under this Section 5(a) shall be subject to the condition that Executive deliver a complete release in favor of Holdings and the Company and their respective Subsidiaries, affiliates, officers, directors, employees, principals and attorneys, in form and substance satisfactory to Holdings and the Company.

(b) Death or Disability. In the event of the death or Disability of Executive during the Employment Period, the Company’s obligation to make payments or provide any other benefits under this Agreement shall cease as of the date of death or Disability of Executive; provided that Executive (or his estate) shall be entitled to receive (i) all earned or accrued but unpaid Base Salary, reimbursement of expenses and any other benefits to which Executive is entitled through the Termination Date, (ii) any Performance Bonus that was earned, but not paid, as of, and pro rated through, the Termination Date, and (iii) all amounts or benefits to which Executive is entitled under any applicable employee-benefit plan or arrangement of the Company in which Executive was a participant during his employment with the Company, in accordance with the terms of such plan or arrangement.

(c) Other Termination. If the Employment Period is terminated by the Company for Cause or by Executive for any reason other than Good Reason, Executive shall not be entitled to any severance payments and all of Executive’s benefits shall cease to be effective immediately as of the Termination Date (except as required by law). All of Executive’s rights to fringe benefits and bonuses hereunder (if any) which accrue or become payable after the termination of the Employment Period shall cease upon such termination; provided that Executive (or his estate) shall be entitled to receive (x) all earned or accrued but unpaid Base Salary, reimbursement of expenses and any other benefits to which Executive is entitled through

the Termination Date, (y) any Performance Bonus that was earned, but not paid, as of, and pro rated through, the Termination Date, and (z) all amounts or benefits to which Executive is entitled under any applicable employee-benefit plan or arrangement of the Company in which Executive was a participant during his employment with the Company, in accordance with the terms of such plan or arrangement.

(d) Other Benefits. Except as required by law or as specifically provided in this Section 5, the Company’s obligation to make any payments or provide any other benefits hereunder shall terminate automatically as of the Termination Date.

(e) Termination of Severance. If Executive breaches any of the provisions of Sections 6 through 9 hereof, the Company shall no longer be obligated to make any additional payments or provide any other benefits pursuant to this Section 5.

(f) Pro Rated Performance Bonus. If Executive shall be entitled to any pro rated Performance Bonus pursuant to Section 5 (a), (b) or (c), the Company shall not be required to make payment to Executive of such pro rated Performance Bonus until such time that the Company makes payment of similar bonuses to other participants in the Company’s bonus performance plan after the completion of the fiscal year in which the bonuses were earned.

(a) Expenses. The Company, Holdings and Executive will each pay their own costs and expenses incurred in connection with the negotiation and execution of this Agreement and the agreements contemplated hereby.

(b) Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

(c) Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith, embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

(d) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

(e) Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by Executive, Holdings, the Company, Genstar and their respective successors and assigns, including any entity with which the Company may merge or consolidate or to which all or substantially all of its assets may be transferred; provided, however, that any such assignment by the Company shall include all rights and obligations hereunder, including the severance obligations provided in Section 5; and, provided further, that Executive shall not be entitled to assign his rights or obligations under this Agreement without the prior written consent of Holdings and the Company.

(f) Governing Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.

(g) Remedies. The parties hereto agree and acknowledge that money damages would not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement.

(h) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company, Holdings and Executive.

(i) Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or legal holiday in the state in which the Company’s chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday.

(j) No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

(i) “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933, OR PURSUANT TO RULE 144 UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.”

(ii) Any legend required to be placed thereon by applicable state laws.

(a) In the event of any liquidation, dissolution or winding up of this corporation, either voluntary or involuntary, the holders of the Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of this corporation to the holders of Common Stock by reason of their ownership thereof, the greater of (1) an amount per share equal to $100 per share (as adjusted for stock splits, combinations, reorganizations and the like with respect to the Series A Preferred) plus accrued and unpaid dividends, whether or not declared, on such share, or (2) the amount per share the Series A Preferred Stock would have received had each share of Series A Preferred Stock been converted to Common Stock immediately prior to such event of liquidation, dissolution or winding up. If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series A Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then, the entire assets and funds of this corporation legally available for distribution shall be distributed ratably among the holders of the Series A Preferred Stock in proportion to the preferential amount each such holder is otherwise entitled to receive.

(b) Upon the completion of the distribution required by Section 2(a) above, if assets remain in this corporation, the holders of the Common Stock of this corporation shall receive all of the remaining assets of this corporation, and no further payments shall be made to the holders of Series A Preferred Stock by reason thereof.

(c) A liquidation, dissolution or winding up of this corporation shall be deemed to be occasioned by, or to include, (i) the liquidation, dissolutions or winding of this corporation; or (ii) the acquisition of this corporation by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation, but excluding any merger effected exclusively for the purpose of changing the domicile of this corporation), unless this corporation’s stockholders of record as constituted immediately prior to such acquisition will, immediately after such acquisition or sale (by virtue of securities issued as consideration for this corporation’s acquisition or sale or otherwise) hold at least 50% of the voting power of the surviving or acquiring entity in approximately the same relative percentages after such acquisition or sale as before such acquisition or sale; or (iii) a sale, lease or other disposition of all or substantially all of the assets of the Company and its subsidiaries on a consolidated basis (including securities of the Company’s directly or indirectly owned subsidiaries).

(d) In any of the events specified in (c) above, if the consideration received by this corporation or its stockholders is other than cash, its value will be deemed its fair market value. Any securities shall be valued as follows:

(a) Right to Convert. Subject to Section 4(c), each share of Series A Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share at the office of this corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing $100 by the Conversion Price applicable to such share, determined as hereafter provided, in effect on the date the certificate is surrendered for conversion. The initial Conversion Price per share of Series A Preferred Stock shall be $100. Such initial Conversion Price shall be subject to adjustment as set forth in Section 4(d).

(b) Automatic Conversion. Each share of Series A Preferred Stock shall automatically be converted into shares of Common Stock at the Conversion Price at the time in effect for such share immediately upon the earlier of (i) except as provided below in Section 4(c), this corporation’s sale of its Common Stock in a firm commitment underwritten public offering pursuant to a registration statement under the Securities Act of 1933, as amended, which results in aggregate cash proceeds to this corporation of $75,000,000 (net of underwriting discounts and commissions) or (ii) the date specified by written consent or affirmative vote of the holders of holders of an aggregate of more than 50% of the then outstanding shares of the Series A Preferred Stock.

(c) Mechanics of Conversion. Before any holder of Series A Preferred Stock shall be entitled to convert the same into shares of Common Stock, and to receive certificate(s) therefor, it shall surrender the Series A Preferred Stock certificate or certificates, duly endorsed, at the office of this corporation or of any transfer agent for the Series A Preferred Stock, and shall give written notice to this corporation at its principal corporate office or its transfer agent, of the election to convert the same and shall state therein the name or names in which the certificate or certificates for shares of this corporation are to be issued; provided, however, that in the event of an automatic conversion pursuant to paragraph 4(b) above, the outstanding shares of Series A Preferred Stock shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to this corporation or its transfer agent; provided further, however, that this corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such automatic conversion unless either the certificates evidencing such shares of Series A Preferred Stock are delivered to the corporation or its transfer agent as provided above, or the holder notifies this corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to this corporation to indemnify this corporation from any loss incurred by it in connection with such certificates. This corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Series A Preferred Stock, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid and a check payable to the holder in the amount of any cash amounts payable as the result of a conversion into fractional shares of Common Stock, plus any declared or accumulated but unpaid dividends on the converted Series A Preferred Stock. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Series A Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date. If the conversion is in connection with an underwritten offering of securities registered pursuant to the Securities Act of 1933, as amended, the conversion may, at the option of any holder tendering Series A Preferred Stock for conversion, be conditioned upon the closing of the sale of securities pursuant to such offering, in which event the person(s) entitled to receive the Common Stock issuable upon such conversion of the Series A Preferred Stock shall not be deemed to have converted such Series A Preferred Stock until immediately prior to the closing of such sale of securities.

(d) Adjustments to Conversion Price.

(e) Other Distributions. In the event this corporation shall declare a distribution payable in securities of other persons, evidences of indebtedness issued by this corporation or other persons, assets (excluding cash dividends) or options or rights not referred to in Section 4(d)(iii), then, in each such case for the purpose of this Section 4(e), the holders of Series A Preferred Stock shall be entitled to a proportionate share of any such distribution as though they were the holders of the number of shares of Common Stock of this

corporation into which their shares of Preferred Stock are convertible as of the record date fixed for the determination of the holders of Common Stock of this corporation entitled to receive such distribution.

(f) No Impairment. This corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action taken without the approval of the holders of a majority of the Series A Preferred Stock, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by this corporation, but will at all times in good faith assist in carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of Preferred Stock against impairment.

(g) No Fractional Shares and Certificate as to Adjustments.

(h) Notices of Record Date. In the event of any taking by this corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, to effect a liquidation, dissolution or winding up or reclassification or recapitalization or to receive any other right, this corporation shall mail to each holder of Series A Preferred Stock, at least 20 days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

(i) Reservation of Stock Issuable Upon Conversion. This corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series A

Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all then outstanding shares of Series A Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Series A Preferred Stock, in addition to such other remedies as shall be available to the holder of such Preferred Stock, this corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this certificate.

(j) Notices. Any notice required by the provisions of this Section 4 to be given to the holders of shares of Series A Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, if deposited with a nationally recognized overnight courier, or if personally delivered, and addressed to each holder of record at his address appearing on the books of this corporation.

(a) sell, convey, or otherwise dispose of or encumber all or substantially all of its property or business or merge into or consolidate with any other corporation (other than a wholly-owned subsidiary corporation) or effect any other transaction or series of related transactions in which more than fifty percent (50%) of the voting power of this corporation is disposed of, provided that this Section 6(a) shall not apply to a merger effected exclusively for the purpose of changing the domicile of this corporation);

(b) amend (directly or indirectly, by merger, consolidation or otherwise) this Amended and Restated Certificate of Incorporation or the bylaws of this corporation in any way that alters or changes the rights, preferences or privileges of the shares of Series A Preferred Stock so as to affect adversely the shares of such series;

(c) increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series A Preferred Stock;

(d) authorize or issue (director or indirectly, by merger, consolidation or otherwise), or obligate itself to issue, any other equity security, including any other security convertible into or exercisable for any equity security (i) having a preference over, or being on a parity with, the Series A Preferred Stock with respect to voting, dividends or upon liquidation; or

(e) redeem, purchase or otherwise acquire (or pay into or set funds aside for a sinking fund for such purpose) any share or shares of Preferred Stock or Common Stock; provided, however, that this restriction shall not apply to the repurchase of shares of Common Stock from employees, officers, directors, consultants or other persons performing services for this corporation or any subsidiary pursuant to agreements, approved by holders of an aggregate of more than 50% of the then outstanding shares of the Series A Preferred Stock, under which this corporation has the option to repurchase such shares upon the occurrence of certain events, such as the termination of employment.

(i) “Investment” shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary equal to an amount (if positive) equal to (A) the Company’s “Investment” in such Subsidiary at the time of such redesignation less (B) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and

(ii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Company.

(i) the Registrar shall register the transfer of any Note constituting a Restricted Security, whether or not such Note bears the Private Placement Legend, if (x) the requested transfer is after November 30, 2006 or (y) (1) in the case of a transfer to an Institutional Accredited Investor which is not a QIB (excluding Non-U.S. Persons), the proposed transferee has delivered to the Registrar a certificate substantially in the form of Exhibit D hereto or (2) in the case of a transfer to a Non-U.S. Person, the proposed transferor has delivered to the Registrar a certificate substantially in the form of Exhibit E hereto; and

(ii) if the proposed transferor is an Agent Member holding a beneficial interest in the Global Note, upon receipt by the Registrar of (x) the certificate, if any, required by paragraph (i) above and (y) instructions given in accordance with the Applicable Procedures and the Registrar’s procedures,

(i) the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Note stating, or has otherwise advised the Company and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Note stating, or has otherwise advised the Company and the Registrar in writing, that it is purchasing the Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; and

(ii) if the proposed transferee is an Agent Member, and the Notes to be transferred consist of Physical Notes which after transfer are to be evidenced by an interest in the Global Note, upon receipt by the Registrar of instructions given in accordance with the Applicable Procedures and the Registrar’s procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Note in an amount equal to the principal amount of the Physical Notes to be transferred, and the Trustee shall cancel the Physical Notes so transferred.

(i) a Default or an Event of Default shall have occurred and be continuing;

(ii) the Company is not permitted to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to the covenant described under Section 4.08; or

(iii) the aggregate amount of Restricted Payments (including such proposed Restricted Payment) made subsequent to the Issue Date (the amount expended for such purposes, if other than in cash, being the Fair Market Value of such property at the time of the making thereof) shall exceed the sum of:

(i) the Company will deliver an Officers’ Certificate to the Trustee certifying that such transactions are in compliance with clause (y) of the preceding paragraph;

(ii) if such Affiliate Transaction involves aggregate payments or other property with a Fair Market Value in excess of $2.5 million shall be approved by a majority of the members of the Board of Directors of the Company (including a majority of the disinterested members

thereof), as the case may be, such approval to be evidenced by a Board Resolution stating that such Board of Directors has determined that such transaction complies with this Section 4.14(ii); and

(iii) if such Affiliate Transaction involves an aggregate Fair Market Value of more than $5.0 million, the Company will, prior to the consummation thereof, obtain a favorable opinion as to the fairness of the financial terms of such transaction or series of related transactions to the Company or the relevant Restricted Subsidiary, as the case may be, from an Independent Financial Advisor and file the same with the Trustee.

(i) if the rescission would not conflict with any judgment or decree;

(ii) if all existing Events of Default have been cured or waived except nonpayment of principal, premium, if any, interest or Additional Interest, if any, that has become due solely because of the acceleration;

(iii) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal and premium, if any, and Additional Interest, if any, which has become due otherwise than by such declaration of acceleration, has been paid;

(iv) if the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its reasonable expenses, disbursements and its advances; and

(v) in the event of the cure or waiver of an Event of Default of the type described in Section 6.01(6) or (7), the Trustee shall have received an Officers’ Certificate and an Opinion of Counsel that such Event of Default has been cured or waived.

(i) The Notes shall be authenticated and delivered, and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised solely, by the Trustee.

(ii) The rights, powers, duties and obligations hereby conferred or imposed upon the Trustee shall be conferred or imposed upon and exercised or performed by the Trustee or by the Trustee and such co-trustee or separate trustee, or by the Collateral Agent and such co-collateral agent or separate collateral agent, jointly as shall be provided in the instrument appointing such co-trustee or separate trustee or co-collateral agent or separate collateral agent, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Trustee shall be incompetent or unqualified to perform such act, in which event such rights,

powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee, collateral agent or co-collateral agent or separate collateral agent.

(iii) The Trustee at any time, by an instrument in writing executed by it, with the concurrence of the Company evidenced by a Board Resolution, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section 7.13; provided, that, in case an Event of Default has occurred and is continuing, the Trustee shall have power to accept the resignation of, or remove, any such co-trustee, co-collateral agent, separate trustee or separate collateral agent without the concurrence of the Company. Upon the written request of the Trustee, the Company shall join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-trustee, co-collateral agent, separate trustee or separate collateral agent so resigned or removed may be appointed in the manner provided in this Section 7.13.

(iv) No co-trustee, co-collateral agent or separate trustee or separate collateral agent hereunder shall be personally liable by reason of any act or omission of any other such trustee or collateral agent hereunder.

(v) Any act of Holders delivered to the Trustee shall be deemed to have been delivered to each such co-trustee or separate trustee and any act of Holders delivered to the Collateral Agent shall be deemed to have been delivered to each such co-collateral agent or separate collateral agent.

Re: Equal Opportunity Program

Re: Working Hours

Subject: Combination or Elimination of Classifications

(i) Securities not subject to investment letter or other similar restrictions on free marketability:

(ii) The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in (i) (A), (B) or (C) to reflect the approximate fair market value thereof, as mutually determined by this corporation and the holders of at least a majority of the voting power of all then outstanding shares of Preferred Stock.

(iii) In the event the requirements of Section 2(c) are not complied with, this corporation shall forthwith either:

(iv) This corporation shall give each holder of record of Series A Preferred Stock written notice of such impending transaction not later than twenty (20) days prior to the stockholders’ meeting called to approve such transaction, or twenty (20) days prior to the closing of such transaction, whichever is earlier, and shall also notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the impending transaction and the provisions of this Section 2, and this corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take place sooner than twenty (20) days after this corporation has given the first notice provided for herein or sooner than ten (10) days after this corporation has given notice of any material changes provided for herein; provided, however, that such periods may be shortened upon the approval of holders of an aggregate of more than 50% of the then outstanding shares of the Series A Preferred Stock.

(i) Adjustments for Subdivisions or Combinations of Common. After the date of the filing of this Amended and Restated Certificate of Incorporation, if the outstanding shares of Common Stock shall be subdivided (by stock split, stock dividend or otherwise), into a greater number of shares of Common Stock, the Conversion Price in effect immediately prior to such subdivision shall, concurrently with the effectiveness of such subdivision, be proportionately decreased. After the date of the filing of this Amended and Restated Certificate of Incorporation, if the outstanding shares of Common Stock shall be combined (by reclassification or otherwise) into a lesser number of shares of Common Stock, the Conversion Price in effect immediately prior to such combination shall, concurrently with the effectiveness of such combination, be proportionately increased.

(ii) Adjustments for Reclassification, Exchange and Substitution. If the Common Stock issuable upon conversion of the Series A Preferred shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares provided for above), the Conversion Price then in effect shall, concurrently with the effectiveness of such reorganization or reclassification, be proportionately adjusted such that the Series A Preferred shall be convertible into, in lieu of the number of shares of Common Stock which the holders would otherwise have been entitled to receive, a number of shares of such other class or classes of stock equivalent to the number of shares of Common Stock that would have been subject to receipt by the holders upon conversion of the Series A Preferred immediately before that change.

(iv) Adjustments for Dilutive Issuances.

(i) No fractional shares shall be issued upon the conversion of any share or shares of the Series A Preferred Stock, and the number of shares of Common Stock to be issued shall be rounded to the nearest whole share. Whether or not fractional shares are issuable upon such conversion shall be determined on the basis of the total number of shares of Series A Preferred Stock the holder is at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion.

(ii) Upon the occurrence of each adjustment or readjustment of the Conversion Price of Series A Preferred Stock pursuant to this Section 4, this corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Series A Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. This corporation shall, upon the written request at any time of any holder of Series A Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Conversion Price for the Series A Preferred Stock at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of a share of the Series A Preferred Stock.

(1) an Investment by the Company or any Restricted Subsidiary in any Person (other than a Subsidiary) pursuant to which such Person becomes a Wholly Owned Subsidiary, or is merged with or into the Company or any Restricted Subsidiary, or

(2) the acquisition by the Company or any Restricted Subsidiary of the assets of any Person (other than a Subsidiary) that constitute all or substantially all of the assets of such Person or comprise any division or line of business of such Person.

(1) any Capital Stock of any Restricted Subsidiary; or

(2) any other property or assets of the Company or any Restricted Subsidiary other than in the ordinary course of business, consistent with past practice;

(1) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock of such Person;

(2) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person; and

(3) any warrants, rights or options to purchase any of the instruments or interests referred to in clauses (1) or (2) above.

(1) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof;

(2) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor’s Ratings Group (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”);

(3) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody’s;

(4) certificates of deposit or bankers’ acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States of America or any state thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined net capital and surplus of not less than $250.0 million;

(5) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (1) above entered into with any bank meeting the qualifications specified in clause (4) above; and

(6) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (1) through (5) above.

(1) any direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one transaction or a series of related transactions, of all or substantially all of the assets of the Company to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a “Group”), other than a transaction in which the transferee is controlled by one or more Permitted Holders;

(2) the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company, other than (A) a transaction in which the surviving or Transferee Person is a Person that is controlled by the Permitted Holders or (B) any such transaction where the Voting Stock of the Company outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Capital Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance);

(3) the approval by the holders of Capital Stock of the Company of any plan or proposal for the liquidation, winding up or dissolution of the Company;

(4) prior to the first Public Equity Offering, the Permitted Holders cease for any reason to be the Beneficial Owner, directly or indirectly, in the aggregate of at least a majority of the total voting power of the Voting Stock of the Company, whether by virtue of the issuance, sale or other disposition of Capital Stock of the Company, a merger, consolidation or sale of assets involving the Company, a Restricted Subsidiary, any voting trust or other agreement; or

(5) subsequent to the first Public Equity Offering, (a) any Person or Group is or becomes the Beneficial Owner, directly or indirectly, in the aggregate of more than 35% of the

total voting power of the Voting Stock of the Company, and (b) the Permitted Holders Beneficially Own, directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of the Company than such other Person or Group.

(1) Consolidated Net Income; and

(2) to the extent Consolidated Net Income has been reduced thereby:

(1) the incurrence or repayment of any Indebtedness of the Company or any of its Restricted Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to working capital facilities, occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period; and

(2) any Asset Sale or Asset Acquisition (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of the Company or one of its Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of any such Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date), as if such Asset Sale or Asset Acquisition (including the incurrence, assumption or liability for any such Indebtedness or Acquired Indebtedness and also including any Consolidated EBITDA associated with such Asset Acquisition) occurred on the first day of the Four Quarter Period.

(1) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date (including Indebtedness actually incurred on the Transaction Date) and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date; and

(2) notwithstanding clause (1) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Interest Swap Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements.

(1) Consolidated Interest Expense (excluding amortization or write-off of deferred financing costs); plus

(2) the product of (x) the amount of all dividend payments on any series of Preferred Stock of such Person (other than dividends paid in Qualified Capital Stock) paid, accrued or scheduled to be paid or accrued during such period times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local tax rate of such Person, expressed as a decimal.

(1) gains from Asset Sales and extraordinary gains, in each case together with any provision for taxes on such gains;

(2) the net income (but not loss) of any Subsidiary of the Company to the extent that the declaration of dividends or similar distributions by that Subsidiary of that income is restricted by a contract, operation of law or otherwise;

(3) the net income (but not loss) of any Person, other than the Company or a Restricted Subsidiary, except to the extent of cash dividends or distributions paid to the Company or to a Restricted Subsidiary by such Person;

(4) any restoration to income of any material contingency reserve, except to the extent that provision for such reserve was made out of Consolidated Net Income accrued at any time following the Issue Date;

(5) income or loss attributable to discontinued operations (including, without limitation, operations disposed of during such period whether or not such operations were classified as discontinued);

(6) all gains realized on or because of the purchase or other acquisition by the Company or any of its Restricted Subsidiaries of any securities of such Person or any of its Restricted Subsidiaries;

(7) the cumulative effect of a change in accounting principles; and

(8) in the case of a successor to the Company by consolidation or merger or as a transferee of the Company’s assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets.

(1) all Obligations of such Person for borrowed money;

(2) all Obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(3) all Capitalized Lease Obligations of such Person;

(4) all Obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all Obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities arising in the ordinary course of business, consistent with past practice, that are not overdue by 90 days or more or are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and any deferred purchase price represented by earn outs consistent with the Company’s past practice);

(5) all Obligations for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction, whether or not then due;

(6) guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (1) through (5) above and clause (8) below;

(7) all Obligations of any other Person of the type referred to in clauses (1) through (6) which are secured by any Lien on any property or asset of such Person, the amount of any such Obligation being deemed to be the lesser of the Fair Market Value of the property or asset securing such Obligation or the amount of such Obligation;

(8) all Interest Swap Obligations and all Obligations under Currency Agreements of such Person; and

(9) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any.

(1) reasonable out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions);

(2) all taxes and other costs and expenses actually paid or estimated by the Company (in good faith) to be payable in cash in connection with such Asset Sale;

(3) repayment of Indebtedness that is secured by the property or assets that are the subject of such Asset Sale and is required to be repaid in connection with such Asset Sale; and

(4) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale;

(1) Indebtedness under the Notes issued on the Issued Date or in the Exchange Offer in an aggregate outstanding principal amount not to exceed $165.0 million and the related Guarantees;

(2) Indebtedness incurred pursuant to the Credit Agreement in an aggregate principal amount at any time outstanding not to exceed $30.0 million, as such amount may be reduced from time to time as a result of permanent reductions of the commitments thereunder as provided in Section 4.10;

(3) other Indebtedness of the Company and its Restricted Subsidiaries outstanding on the Issue Date;

(4) Interest Swap Obligations of the Company or any Restricted Subsidiary of the Company covering Indebtedness of the Company or any of its Restricted Subsidiaries; provided, however, that such Interest Swap Obligations are entered into for the purpose of fixing or hedging interest rates with respect to any fixed or variable rate Indebtedness that is permitted by the Indenture to be outstanding to the extent that the notional amount of any such Interest Swap Obligation does not exceed the principal amount of Indebtedness to which such Interest Swap Obligation relates;

(5) Indebtedness under Currency Agreements; provided that in the case of Currency Agreements which relate to Indebtedness, such Currency Agreements do not increase the Indebtedness of the Company and its Restricted Subsidiaries outstanding other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder;

(6) intercompany Indebtedness of the Company or a Guarantor for so long as such Indebtedness is held by the Company or a Guarantor; provided that if as of any date any other Person owns or holds any such Indebtedness or a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness under this clause (6) by the issuer of such Indebtedness;

(7) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn

against insufficient funds in the ordinary course of business, consistent with past practice; provided, that such Indebtedness is extinguished within three Business Days of incurrence;

(8) Indebtedness of the Company or any of its Restricted Subsidiaries represented by letters of credit for the account of the Company or such Restricted Subsidiary, as the case may be, to provide security for workers’ compensation claims, payment obligations in connection with self-insurance or similar requirements in the ordinary course of business, consistent with past practice;

(9) obligations in respect of performance, bid and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business, consistent with past practice;

(10) Indebtedness represented by Capitalized Lease Obligations and Purchase Money Indebtedness incurred in the ordinary course of business, consistent with past practice (including Refinancings thereof that do not result in an increase in the aggregate principal amount of Indebtedness of such Person as of the date of such proposed Refinancing (plus the amount of any premium required to be paid under the terms of the instrument governing such Indebtedness and plus the amount of reasonable expenses incurred by the Company in connection with such Refinancing)) not to exceed $5.0 million at any time outstanding;

(11) Refinancing Indebtedness;

(12) Indebtedness represented by guarantees by the Company or a Restricted Subsidiary of Indebtedness incurred by the Company or a Restricted Subsidiary so long as the incurrence of such Indebtedness by the Company or any such Restricted Subsidiary is otherwise permitted by the terms of the Indenture;

(13) Indebtedness of the Company or any of its Restricted Subsidiaries to the extent the net proceeds thereof are promptly used to redeem the Notes in full or deposited to defease or discharge the Notes, in each case, in accordance with the Indenture; and

(14) additional Indebtedness of the Company and its Restricted Subsidiaries in an aggregate principal amount not to exceed $15.0 million at any time outstanding.

(1) Investments in any Person that is or will become immediately after such Investment a Guarantor or that will merge or consolidate with or into the Company or a Guarantor, or that transfers or conveys all or substantially all of its assets to the Company or a Guarantor;

(2) Investments in the Company by any Restricted Subsidiary; provided that any Indebtedness evidencing such Investment is unsecured and subordinated, pursuant to a written agreement, to the Company’s Obligations under the Notes and the Indenture;

(3) Investments in cash and Cash Equivalents;

(4) Currency Agreements and Interest Swap Obligations entered into in the ordinary course of the Company’s or its Restricted Subsidiaries’ businesses, consistent with past practice, and otherwise in compliance with the Indenture;

(5) Investments in the Notes and Exchange Notes;

(6) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers in exchange for claims against such trade creditors or customers;

(7) Investments as a result of non-cash consideration received in connection with an Asset Sale made in compliance with Section 4.10;

(8) Investments in existence on the Issue Date;

(9) loans and advances, including advances for travel and moving expenses, to employees, officers and directors of the Company and its Restricted Subsidiaries in the ordinary course of business, consistent with past practice, for bona fide business purposes and in accordance with applicable laws not in excess of $500,000 at any one time outstanding; and

(10) advances to suppliers and customers in the ordinary course of business, consistent with past practice.

(1) Liens (other than Liens arising under ERISA) for taxes, assessments or governmental charges or claims either (a) not delinquent or (b) contested in good faith by appropriate proceedings and as to which the Company or its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP;

(2) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law or pursuant to customary reservations or retentions of title incurred in the ordinary course of business, consistent with past practice, for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof;

(3) Liens incurred or deposits made in the ordinary course of business, consistent with past practice, in connection with workers’ compensation, unemployment insurance and other types of social security, including any Lien securing letters of credit issued in the ordinary course of business, consistent with past practice, in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);

(4) easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of real property not interfering in any material respect with the ordinary conduct of the business, consistent with past practice, of the Company or any of its Restricted Subsidiaries;

(5) any interest or title of a lessor under any Capitalized Lease Obligation permitted pursuant to clause (10) of the definition of “Permitted Indebtedness;” provided that such Liens do not extend to any property or assets which is not leased property subject to such Capitalized Lease Obligation;

(6) Liens securing Purchase Money Indebtedness permitted pursuant to clause (10) of the definition of “Permitted Indebtedness;” provided, that (a) the Indebtedness shall not exceed the cost of the property or assets acquired, together, in the case of real property, with the cost of the construction thereof and improvements thereto, and shall not be secured by a Lien on any property or assets of the Company or any Restricted Subsidiary other than such property or assets so acquired or constructed and improvements thereto and (b) the Lien securing such Indebtedness shall be created within 180 days of such acquisition or construction or, in the case of a refinancing of any Purchase Money Indebtedness, within 180 days of such refinancing;

(7) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(8) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof;

(9) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off;

(10) Liens securing Interest Swap Obligations that relate to Indebtedness that is otherwise permitted under the Indenture;

(11) Liens securing Indebtedness under Currency Agreements that are permitted under the Indenture;

(12) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within such proceedings may be initiated shall not have expired;

(13) Liens securing Acquired Indebtedness incurred in accordance with Section 4.08, provided, that such Liens do not extend to or cover any property or assets of the Company or of any of its Restricted Subsidiaries other than the property or assets that secure the Acquired Indebtedness;

(14) Liens securing the Notes and all other monetary obligations under the Indenture and the Guarantees;

(15) Liens securing Indebtedness under the Credit Agreement to the extent such Indebtedness is permitted under clause (2) of the definition of the term “Permitted Indebtedness;” and

(16) Liens securing Refinancing Indebtedness incurred to Refinance any Indebtedness secured by a Lien permitted under this paragraph and incurred in accordance with Section 4.08; provided, that such Liens: (i) are no less favorable to the Holders and are not more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being Refinanced; and (ii) do not extend to or cover any property or assets of the Company or any of its Restricted Subsidiaries not securing the Indebtedness so Refinanced.

(1) have an aggregate principal amount (or, if such Indebtedness is issued with original issue discount, an aggregate offering price) greater than the sum of (x) the aggregate principal amount of the Indebtedness being Refinanced (or, if such Indebtedness being Refinanced is issued with original issue discount, the aggregate accreted value) as of the date of such proposed Refinancing plus (y) the amount of fees, expenses, premium, defeasance costs and accrued but unpaid interest relating to the Refinancing of such Indebtedness being Refinanced;

(2) create Indebtedness with: (a) a Weighted Average Life to Maturity that is less than the Weighted Average Life to Maturity of the Indebtedness being Refinanced; or (b) a final maturity earlier than the final maturity of the Indebtedness being Refinanced; or

(3) affect the security, if any, for such Refinancing Indebtedness (except to the extent that less security is granted to holders of such Refinancing Indebtedness);

(1) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person; or

(2) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person.

(1) any Subsidiary of the Company that at the time of determination shall be or continue to be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below; and

(2) any Subsidiary of an Unrestricted Subsidiary.

(1) the Company certifies to the Trustee that such designation complies with Section 4.09; and

(2) each Subsidiary to be so designated and each of its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries.

(1) immediately after giving effect to such designation, the Company is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.08; and

(2) immediately before and immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing.

(1) a term has the meaning assigned to it;

(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(3) “or” is not exclusive;

(4) words in the singular include the plural, and words in the plural include the singular;

(5) “herein,” “hereof” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;

(6) when the words “includes” or “including” are used herein, they shall be deemed to be followed by the words “without limitation”;

(7) all references to Sections or Articles refer to Sections or Articles of this Indenture unless otherwise indicated; and

(8) unless otherwise defined or the context otherwise requires, terms for which meanings are provided in this Indenture shall have such meanings when used in each other Indenture Document.

(1) in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed; or

(2) if such Notes are not then listed on a national securities exchange, on a pro rata basis, by lot or by such method as the Trustee may reasonably determine is fair and appropriate; provided that no partial redemption will reduce the principal amount of a Note not redeemed to less than $1,000; and provided further, that if a partial redemption is made with the proceeds of an Equity Offering then the Trustee shall select the Notes or portions thereof for redemption only on a pro rata basis or on as nearly a

pro rata basis as is practicable (subject to the procedures of the Depository), unless such method is prohibited.

(1) the Redemption Date;

(2) the Redemption Price and the amount of accrued interest and Additional Interest, if any, to be paid to (but not including) the Redemption Date;

(3) the name and address of the Paying Agent;

(4) the CUSIP number;

(5) the subparagraph of the Notes pursuant to which such redemption is being made;

(6) the place where such Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price plus accrued interest and Additional Interest, if any, to (but not including) the Redemption Date;

(7) that, unless the Company fails to deposit with the Paying Agent funds in satisfaction of the applicable redemption price, interest and Additional Interest, if any, on Notes called for redemption ceases to accrue on and after the Redemption Date in accordance with Section 3.05, and the only remaining right of the Holders of such Notes is to receive payment of the Redemption Price plus accrued interest and Additional Interest, if any, to (but not including) the Redemption Date, upon surrender to the Paying Agent of the Notes redeemed;

(8) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date, and upon surrender of such Note, a new Note or Notes in the aggregate principal applicable amount equal to the unredeemed portion thereof shall be issued; and

(9) if fewer than all the applicable Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of the applicable Notes to be redeemed and the aggregate principal amount of the applicable Notes to be outstanding after such partial redemption.

(1) declare or pay any dividend or make any distribution (other than dividends or distributions payable (i) in Qualified Capital Stock of the Company or (ii) to the Company or a Guarantor) on or in respect of shares of Capital Stock of the Company or its Restricted Subsidiaries;

(2) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company, any Restricted Subsidiary or any Affiliate of the Company (other than any such Capital Stock owned by the Company or any Guarantor);

(3) make any principal payment on, purchase, defease, redeem, prepay or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, any Indebtedness of the Company or any Guarantor that is subordinate or junior in right of payment to the Notes or a Guarantee; or

(4) make any Investment (other than Permitted Investments);

(1) the payment of any dividend or other distribution or redemption within 60 days after the date of declaration of such dividend or call for redemption if such payment would have been permitted on the date of declaration or call for redemption;

(2) the acquisition of any shares of Qualified Capital Stock of the Company, solely in exchange for other shares of Qualified Capital Stock of the Company;

(3) the acquisition of any Indebtedness of the Company or the Guarantors that is subordinate or junior in right of payment to the Notes and Guarantees or the acquisition of

Disqualified Capital Stock either (i) solely in exchange for shares of Qualified Capital Stock of the Company, or (ii) through the application of net proceeds of a sale for cash (other than to a Subsidiary of the Company) within sixty (60) days after such sale if no Default or Event of Default would exist after giving effect thereto, of Refinancing Indebtedness;

(4) an Investment either (i) solely in exchange for shares of Qualified Capital Stock of the Company or (ii) through the application of the net proceeds of a sale for cash (other than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the Company within sixty (60) days after such sale;

(5) in the event of a Change of Control, and if no Default shall have occurred and be continuing or would exist after giving effect thereto, the payment, purchase, redemption, defeasance, satisfaction, discharge or other acquisition or retirement of Indebtedness that is subordinated to the Notes or the Guarantees, in each case, at a purchase price not greater than 101% of the principal amount of such Indebtedness (or, if such Indebtedness was issued with original issue discount, 101% of the accreted value), plus any accrued and unpaid interest thereon; provided, however, that prior to such payment, purchase, redemption, defeasance, satisfaction, discharge or other acquisition or retirement, the Company has made a Change of Control Offer with respect to the Notes as a result of such Change of Control and has repurchased all Notes validly tendered and not withdrawn in connection with such Change of Control Offer;

(6) (i) general corporate overhead expenses of Holdings, including, without limitation, franchise taxes and other fees required to maintain the existence of Holdings, insurance premiums and indemnification claims made by directors or officers of Holdings attributable to the ownership or operation of the Company and its Subsidiaries and (ii) reasonable fees and expenses paid to members of the board of directors of Holdings; provided, that such fees and expenses described in this clause (ii) are in an aggregate amount not to exceed $500,000 in any fiscal year;

(7) the application of the proceeds from the issuance of the Notes on the Issue Date as described under the “Use of Proceeds” section of the Offering Circular;

(8) advances to any direct or indirect parent entity of the Company to be used by such entity solely to pay federal, state and local income taxes made no earlier than five days prior to the date on which such entity is required to make such payment in an amount not to exceed the aggregate tax liability of the Company and its Restricted Subsidiaries for such calendar year determined as if the Company and its Restricted Subsidiaries were a separate affiliated group (as defined in Section 1504 of the Internal Revenue Code of 1986, as amended) filing a consolidated return, or, to the extent applicable, a separate group filing combined or unitary returns, and then only to the extent that any such payments are actually paid by such entity to governmental entities;

(9) if no Default or Event of Default has occurred and is continuing or would exist after giving effect thereto, the purchase, repurchase, redemption or other acquisition of Capital Stock of the Company from employees, former employees, directors, or former directors of the Company (or permitted transferees of such employees, former employees, directors or former directors), pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors of the Company under which such individuals purchase or sell, or are granted the option to purchase or sell, shares of such Capital Stock; provided, that the aggregate amount of such repurchases and other acquisitions in any calendar year shall not exceed $500,000;

(10) if no Default or Event of Default has occurred and is continuing or would exist after giving effect thereto, the payment of the consulting fee pursuant to the Management Agreement; provided, that the aggregate amount of such fee in any calendar year shall not exceed $1.0 million; and

(11) if no Default or Event of Default shall have occurred and be continuing or would exist after giving effect thereto, other Restricted Payments not to exceed $10.0 million in the aggregate since the Issue Date.

(1) the Company or the applicable Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets sold or otherwise disposed;

(2) at least 75% of the consideration Received by the Company or the Restricted Subsidiary, as the case may be, from such Asset Sale is in the form of cash or Cash Equivalents received substantially concurrent with the time of such disposition; provided that the amount of any liabilities (as shown on the most recent applicable balance sheet) of the Company or such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes) that are assumed by the transferee of any such assets shall be deemed to be cash for purposes of this provision if the documents governing such liabilities provide that there is no further recourse to the Company or any of its Subsidiaries with respect to such liabilities; and

(3) the Company shall apply, or cause such Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within 360 days of receipt thereof either:

(1) pay dividends or make any other distributions on or in respect of its Capital Stock;

(2) make loans or advances or to pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary; or

(3) transfer any of its property or assets to the Company or any other Restricted Subsidiary,

(1) any transfer, issuance or sale if, immediately after giving effect thereto, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any Investment in such Person remaining after giving effect to such issuance or sale would have been permitted to be made under Section 4.09 if made on the date of such issuance or sale; or

(2) the sale of all of the Capital Stock of a Restricted Subsidiary in compliance with the provisions of Section 4.10.

(1) reasonable fees and compensation paid to and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any Restricted Subsidiary;

(2) transactions exclusively between or among the Company and any of its Wholly Owned Restricted Subsidiaries or exclusively between or among such Wholly Owned Restricted Subsidiaries, provided, that such transactions are not otherwise prohibited by the Indenture;

(3) any agreement as in effect as of the Issue Date or any transaction contemplated thereby and any amendment thereto or any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders, the Company or the Restricted Subsidiaries in all material respects than the original agreement as in effect on the Issue Date;

(4) Restricted Payments permitted by the Indenture or Permitted Investments;

(5) any merger or other transaction with an Affiliate solely for the purpose of reincorporating the Company in another jurisdiction or creating a holding company of the Company;

(6) any employment, stock option, stock repurchase, employee benefit compensation, business expense reimbursement, severance, termination or other employment related agreements, arrangements or plans entered into in good faith by the Company or any of its Restricted Subsidiaries in the ordinary course of business;

(7) sales or purchases of inventory, other products or services to or from any Affiliate of the Company entered into in the ordinary course of business on terms no less favorable to the Company and its Subsidiaries than those that could be obtained at the time of such sale or purchase in arm’s length dealings with a Person who is not an Affiliate; and

(8) any agreement existing and as in effect on the Issue Date, including the Management Agreement.

(1) execute and deliver to the Trustee a supplemental indenture in form reasonably satisfactory to the Trustee pursuant to which such Subsidiary shall unconditionally guarantee on a senior secured basis all of the Company’s obligations under the Notes and the Indenture on the terms set forth in the Indenture;

(2) execute and deliver to the Collateral Agent such amendments to the Collateral Agreements as the Collateral Agent deems necessary or advisable in order to grant to the Collateral Agent, for the benefit of the Holders, a perfected security interest in the Capital Stock of such new Domestic Restricted Subsidiary and any debt securities of such new Subsidiary, subject to the Permitted Liens, which are owned by the Company or Subsidiary and required to be pledged pursuant to the Security Agreement, (b) deliver to the Collateral Agent any certificates representing such Capital Stock and debt securities, together with (i) in the case of such Capital Stock, undated stock powers or instruments of transfer, as applicable, endorsed in blank, and (ii) in the case of such debt securities, endorsed in blank, in each case executed and delivered by an Officer of the Company or such Subsidiary, as the case may be;

(3) take such actions as are necessary or as the Collateral Agent reasonably determines to be advisable to grant to the Collateral Agent for the benefit of the Holders a perfected security interest in the assets of such new Domestic Restricted Subsidiary, subject to the Permitted Liens, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Security Agreement or by law or as may be reasonably requested by the Collateral Agent;

(4) take such further action and execute and deliver such other documents specified in the Indenture or otherwise reasonably requested by the Trustee or the Collateral Agent to effectuate the foregoing; and

(5) deliver to the Trustee an Opinion of Counsel that such supplemental indenture and any other documents required to be delivered have been duly authorized, executed and delivered by such Domestic Restricted Subsidiary and constitutes a legal, valid, binding and enforceable obligations of such Domestic Restricted Subsidiary and such other opinions regarding the perfection of such Liens in the assets of such Domestic Restricted Subsidiary as provided for in the Indenture.

(1) as mortgagee, fully executed counterparts of Mortgages, each dated as of a date prior to the 60^th day after the Issue Date or as of a date prior to the 90^th day after the applicable date of acquisition of such property, as the case may be, duly executed by the Company or the applicable Domestic Restricted Subsidiary, together with evidence of the completion (or satisfactory arrangements for the completion), of all recordings and filings of such Mortgage as may be necessary to create a valid, perfected Lien, subject to Permitted Liens, against the properties purported to be covered thereby and, in the case of clause (x), opinions of counsel addressed to the Initial Purchaser, the Trustee and the Collateral Agent and in form and substance reasonably satisfactory to the Initial Purchaser (as communicated in writing by the Initial Purchaser to the Trustee), in connection with the grant of such Mortgages;

(2) mortgagee’s title insurance policies in favor of the Collateral Agent, as mortgagee for the ratable benefit of the Collateral Agent, the Trustee and the Holders in an amount equal to 100% of the Fair Market Value of the Premises purported to be covered by the related Mortgage, insuring that title to such property is marketable and that the interests created by the Mortgage constitute valid Liens thereon free and clear of all Liens, defects and encumbrances other than Permitted Liens, and such policies shall also include, to the extent available, other customary endorsements and shall be accompanied by evidence of the payment in full of all premiums thereon; and

(3) with respect to each of the covered Premises, the most recent survey of such Premises, together with either (i) an updated survey certification in favor of the Trustee and the Collateral Agent from the applicable surveyor stating that, based on a visual inspection of the property and the knowledge of the surveyor, there has been no change in the facts depicted in the survey or (ii) an affidavit from the Company or the applicable Guarantor, as applicable, stating that there has been no change, other than, in each case, changes that do not materially adversely affect the use by the Company or Guarantor, as applicable, of such Premises for the Company or such Guarantor’s business as so conducted, or intended to be conducted, at such Premises.

(1) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company, if any) and, with respect to the annual information only, a report thereon by the Company’s certified independent accountants; and

(2) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports, in each case within the time periods specified in the SEC’s rules and regulations.

(1) either:

(2) immediately after giving effect to such transaction and the assumption contemplated by clause (1)(b)(y) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction), (a) the Company or such Surviving Entity, as the case may be, is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the covenant described under Section 4.08 and (b) no Default or Event of Default shall have occurred or be continuing; and

(3) the Company or the Surviving Entity shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the applicable provisions of this Indenture and that all conditions precedent in the Indenture relating to such transaction have been satisfied.

For purposes of Section 5.01(1), the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries of the Company, the Capital Stock of which constitutes all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

(1) the failure to pay interest and Additional Interest, if any, on any Notes when the same becomes due and payable and the default continues for a period of thirty (30) days;

(2) the failure to pay the principal of or premium, if any, on any Notes, when such principal becomes due and payable, at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or a Net Proceeds Offer when such payments become due);

(3) a default in the observance or performance of any other covenant or agreement contained in the Indenture (other than the payment of the principal of, or premium, if any, or interest or Additional Interest, if any, on any Note) or any Collateral Agreement which default continues for a period of thirty (30) days after the Company receives written notice specifying the default (and demanding that such default be remedied) from the Trustee or the Holders of at least 25% of the outstanding principal amount of the Notes (except in the case of a default pursuant to Section 5.01, which will constitute an Event of Default with such notice requirement but without such passage-of-time requirement);

(4) the failure to pay at final maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness of the Company or any Restricted Subsidiary other than the Notes and Guarantees, or the acceleration of the final stated maturity of any such Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within twenty (20) days from the date of acceleration) if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at final maturity or which has been accelerated (in each case with respect to which the 20-day period described above has elapsed), aggregates $5.0 million or more at any time;

(5) one or more judgments in an aggregate amount in excess of $5.0 million shall have been rendered against the Company or any of its Restricted Subsidiaries (other than any judgment as to which a reputable and solvent third party insurer has accepted full coverage) and such judgments remain undischarged, unpaid or unstayed for a period of sixty (60) days after such judgment or judgments become final and non-appealable;

(6) the Company or any Significant Subsidiary (A) commences a voluntary case or proceeding under the Bankruptcy Code or any other state or federal bankruptcy or insolvency law with respect to itself, (B) consents to the entry of an order for relief against it in an involuntary case under the Bankruptcy Code or any other state or federal bankruptcy or insolvency law, (C) consents to the appointment of a Custodian of it or for substantially all of its property, (D) makes a general assignment for the benefit of its creditors; or (E) takes any corporate action to authorize or effect any of the foregoing;

(7) a court of competent jurisdiction enters an order or decree that (A) is an order for relief in respect of the Company or any Significant Subsidiary in an involuntary case under the Bankruptcy Code or any other state or federal bankruptcy or insolvency law, (B) appoints a Custodian of the Company or any Significant Subsidiary or for substantially all of its property or (C) orders the winding-up or liquidation of its affairs; and such order or decree shall remain unstayed and in effect for a period of sixty (60) consecutive days;

(8) any Collateral Agreement at any time for any reason shall cease to be in full force and effect in all material respects, or ceases to give the Collateral Agent the Liens, rights,

powers and privileges purported to be created thereby, superior to and prior to the rights of all third Persons other than the holders of Permitted Liens and subject to no other Liens except as expressly permitted by the applicable Collateral Agreement;

(9) the Company or any of the Guarantors, directly or indirectly, contest in any manner the effectiveness, validity, binding nature or enforceability of any Collateral Agreement; or

(10) any Guarantee of a Significant Subsidiary ceases to be in full force and effect or any Guarantee of a Significant Subsidiary is declared to be null and void and unenforceable or any Guarantee of a Significant Subsidiary is found to be invalid or any Guarantor denies its liability under its Guarantee (other than by reason of release of a Guarantor in accordance with the terms of the Indenture).

(1) the Holder gives to the Trustee written notice of a continuing Event of Default;

(2) subject to Section 2.09, Holders of at least 25% in principal amount of the outstanding Notes make a written request to the Trustee to institute proceedings in respect of that Event of Default;

(3) such Holders offer to the Trustee indemnity reasonably satisfactory to the Trustee against any loss, liability or expense to be incurred in compliance with such request;

(4) the Trustee does not comply with the request within sixty (60) days after receipt of the request and the offer of indemnity; and

(5) during such sixty (60) day period the Holders of a majority in principal amount of the outstanding Notes do not give the Trustee a written direction which, in the opinion of the Trustee, is inconsistent with the request.

(1) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the TIA, and the Trustee need perform only those duties as are specifically set forth in this Indenture and no covenants or obligations shall be implied in or read into this Indenture against the Trustee; and

(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided, however, in case of any such certificates or opinions furnished to the Trustee which by the provisions hereof are furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

(1) this paragraph does not limit the effect of paragraph (b) of this Section 7.01;

(2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

(3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.

(1) the Trustee fails to comply with Section 7.10;

(2) the Trustee is adjudged bankrupt or insolvent;

(3) a receiver or other public officer takes charge of the Trustee or its property; or

(4) the Trustee becomes incapable of acting with respect to the Notes.

(1) The Company shall have irrevocably deposited in trust with the Trustee, pursuant to an irrevocable trust and security agreement in form and substance reasonably satisfactory to the Trustee, U.S. Legal Tender or non-callable U.S. Government Obligations or a combination thereof, in such amounts and at such times as are sufficient, in the opinion of a nationally-recognized firm of independent public accountants, to pay the principal of, and premium, if any, interest and Additional Interest, if any, on the outstanding Notes on the stated dates for payment or redemption, as the case may be; provided, however, that the Trustee (or other qualifying trustee) shall have received an irrevocable written order from the Company instructing the Trustee (or other qualifying trustee) to apply such U.S. Legal Tender or the proceeds of such U.S. Government Obligations to said payments with respect to the Notes to maturity or redemption;

(2) No Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default arising from the failure to comply with Section 4.08 in connection with the substantially contemporaneous borrowing of funds to fund the deposit referenced in clause (1) above and/or the granting of any Lien securing such borrowing) or insofar as Defaults or Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of such deposit;

(3) Such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default hereunder (other than a Default or Event of Default arising in connection with the substantially contemporaneous borrowing of funds to fund the deposit referenced in clause (1) above and the granting of any Lien securing such borrowing) or any other material agreement or instrument to which the Company or any of it Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;

(4) (i) In the event the Company elects paragraph (b) above, the Company shall deliver to the Trustee an Opinion of Counsel in the United States of America, in form and substance reasonably acceptable to the Trustee, to the effect that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall state that, Holders shall not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance contemplated hereby and shall be subject to federal income tax in the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred or (ii) in the event the Company elects paragraph (c) above, the Company shall deliver to the Trustee an Opinion of Counsel in the United States, in form and substance reasonably satisfactory to the Trustee, to the effect that Holders shall not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance contemplated hereby and shall be subject to federal income tax in the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(5) The Company shall have delivered to the Trustee an Officers’ Certificate stating that the deposit under clause (1) was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others;

(6) The Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent specified herein relating to the defeasance contemplated by this Section 8.01 have been complied with;

(7) The Company shall have delivered to the Trustee an Opinion of Counsel (subject to customary qualifications and exclusions) to the effect that after the 91st day following the date of deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally; and

(8) The Company shall have delivered to the Trustee an Opinion of Counsel (subject to customary qualifications and exclusions) to the effect that the trust resulting from the deposit under clause (1) does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940, as amended.

(1) either:

(2) all other sums payable under this Indenture, the Notes and the Collateral Agreements by the Company have been paid; and

(3) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel stating that all conditions precedent under this Indenture relating to the satisfaction and discharge of this Indenture have been complied with.

(1) to cure any ambiguity, defect or inconsistency contained therein;

(2) to provide for uncertificated Notes in addition to or in place of certificated Notes;

(3) to provide for the assumption of the Company’s or a Guarantor’s obligations to Holders in accordance with the Section 5.01;

(4) to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights of any such Holder under the Indenture, the Notes, the Guarantees or the Collateral Agreements;

(5) to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA;

(6) to allow any Subsidiary or any other Person to guarantee the Notes;

(7) to release a Guarantor as permitted by the Indenture and the relevant Guarantee; or

(8) if necessary, in connection with any addition or release of Collateral permitted under the terms of the Indenture or Collateral Agreements.

(1) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver of any provision of this Indenture or the Notes;

(2) reduce the rate of or change or have the effect of changing the time for payment of interest, including default interest, or Additional Interest on any Notes;

(3) reduce the principal of or change or have the effect of changing the fixed maturity of any Notes, or change the date on which any Notes may be subject to redemption or reduce the redemption price therefor;

(4) make any Notes payable in money other than that stated in the Notes;

(5) make any change in provisions of this Indenture protecting the right of each Holder to receive payment of principal of, premium, if any, interest and Additional Interest, if any, on such Note on or after the due date thereof or to bring suit to enforce such payment, or permitting Holders of a majority in principal amount of Notes to waive Defaults or Events of Default;

(6) amend, change or modify in any material respect the obligation of the Company to make and consummate a Change of Control Offer after the occurrence of a Change of Control, or, modify any of the provisions or definitions with respect thereto;

(7) subordinate the Notes in rights of payment to any other Indebtedness of the Company or any Guarantor;

(8) release any Guarantor from any of its obligations under its Guarantee or this Indenture otherwise than in accordance with the terms of this Indenture;

(9) release all or substantially all of the Collateral otherwise than in accordance with the terms of this Indenture and the Collateral Agreements; or

(10) make any change to Section 9.01 or this Section 9.02.

(1) if (a) all of the Capital Stock issued by such Guarantor or all or substantially all of the assets of such Guarantor are sold or otherwise disposed of (including by way of merger or consolidation) to a Person other than the Company or any of its Domestic Restricted Subsidiaries or (b) such Guarantor ceases to be a Restricted Subsidiary, and the Company otherwise complies, to the extent applicable, with Section 4.10, or

(2) if the Company designates such Guarantor as an Unrestricted Subsidiary in accordance with Section 4.09, or

(3) if the Company exercises its legal defeasance option or its covenant defeasance option as described in Section 8.01, or

(4) upon satisfaction and discharge of this Indenture or payment in full of the principal of, premium, if any, accrued and unpaid interest and Additional Interest, if any, on the Notes and all other Obligations that are then due and payable.

(1) the entity formed by or surviving any such consolidation or merger (if other than the Guarantor) or to which such sale, lease, conveyance or other disposition shall have been made is a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia or the jurisdiction of organization of the Guarantor;

(2) such entity assumes (a) by supplemental indenture (in form and substance reasonably satisfactory to the Trustee), executed and delivered to the Trustee, all of the obligations of the Guarantor under the Guarantee and the performance of every covenant of the Guarantee, this Indenture and the Registration Rights Agreement and (b) by amendment, supplement or other instrument (in form and substance satisfactory to the Trustee and the Collateral Agent) executed and delivered to the Trustee and the Collateral Agent, all obligations of the Guarantor under the Collateral Agreements and in connection therewith shall cause such instruments to be filed and recorded in such jurisdictions and take such other actions as may be required by applicable law to perfect or continue the perfection of the Lien created under the Collateral Agreements on the Collateral owned by or transferred to the surviving entity; and

(3) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing.

(1) an Officers’ Certificate, in form and substance reasonably satisfactory to the Trustee or the Collateral Agent, as the case may be, stating that, in the opinion of the signers, all conditions precedent to be performed by the Company or the applicable Guarantor (as the case may be), if any, provided for in this Indenture or any Collateral Agreement relating to the proposed action have been complied with; and

(2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent to be performed by the Company or the applicable Guarantor (as the case may be), if any, provided for in this Indenture or any Collateral Agreement relating to the proposed action have been complied with.

(1) a statement that the Person making such certificate or opinion has read such covenant or condition;

(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3) a statement that, in the opinion of such Person, he has made such examination or investigation as is reasonably necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(4) a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been complied with.

(1) to enable the Company (or a Guarantor) to consummate asset dispositions permitted or not prohibited under Section 4.10;

(2) if any Subsidiary that is a Guarantor is released from its Guarantee; or

(3) as required pursuant to the terms of the Intercreditor Agreement.

Article 3 - MANAGEMENT PREROGATIVES

Article 9 - BIDDING

Article 11 - GRIEVANCE PROCEDURE

Article 14 - GENERAL

Article 24 - SAFETY AND HEALTH

Article 29 - SEPARABILITY CLAUSE

LETTER NO. 3

WARNER ELECTRIC BRAKE SAFETY POLICY

(A) If traded on a securities exchange or the Nasdaq National Market, the value shall be deemed to be the average of the closing prices of the securities on such exchange over the twenty-day period ending three (3) trading days prior to the closing;

(B) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the twenty-day period ending three (3) trading days prior to the closing; and

(C) If there is no active public market, the value shall be the fair market value thereof, as mutually determined by this corporation and the holders of holders of an aggregate of more than 50% of the then outstanding shares of the Series A Preferred Stock.

(A) cause such closing to be postponed until such time as the requirements of this Section 2 have been complied with; or

(B) cancel such transaction, in which event the rights, preferences and privileges of the holders of the Series A Preferred Stock shall revert to and be the same as such rights, preferences and privileges existing immediately prior to the date of the first notice referred to in Section 2(c)(iv) hereof.

(A) After the date of the filing of this Amended and Restated Certificate of Incorporation, if this corporation shall issue or sell any shares of Common Stock (as actually issued or, pursuant to paragraph (C) below, deemed to be issued) for a consideration per share less than the Conversion Price in effect immediately prior to such issue or sale, then immediately upon such issue or sale the Conversion Price shall be reduced to a price (calculated to the nearest cent) determined by multiplying such prior Conversion Price by a fraction, the numerator of which shall be the number of shares of “Calculated Securities” (defined below) outstanding immediately prior to such issue or sale plus the number of shares of Common Stock which the aggregate consideration received by this corporation for the total number of shares of Common Stock so issued or sold would purchase at such prior Conversion Price, and the denominator of which shall be the number of shares of Calculated Securities outstanding immediately prior to such issue or sale plus the number of shares of Common Stock

so issued or sold. “Calculated Securities” means (i) all shares of Common Stock actually outstanding; and (ii) all Convertible Securities (as defined below).

(B) For the purposes of paragraph (A) above, none of the following issuances shall be considered the issuance or sale of Common Stock:

(C) For the purposes of paragraph (A) above, the following subparagraphs 1 to 3, inclusive, shall also be applicable:

(a) The Global Notes initially shall (i) be registered in the name of the Depository or the nominee of the Depository, (ii) be delivered to the Trustee as custodian for the Depository and (iii) bear legends as set forth in Exhibit C.

(b) Transfers of the Global Notes shall be limited to transfers in whole, but not in part, to the Depository, its successors or their respective nominees. Interests of beneficial owners in the Global Notes may be transferred or exchanged in accordance with the Applicable Procedures of the Depository and the provisions of Section 2.15; provided, however, that prior to the expiration of the Distribution Compliance Period, transfers of beneficial interests in the Regulation S Temporary Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than the Initial Purchaser). In addition, Notes in the form of certificated Notes in registered form in substantially the form set forth in Exhibit A hereto (the “Physical Notes”) shall be transferred to all beneficial owners in exchange for their beneficial interests in the Global Notes if (i) the Depository notifies the Company that it is unwilling or unable to continue as depository for the Global Notes and a successor Depository is not appointed by the Company within ninety (90) days of such notice or (ii) an Event of Default has occurred and is continuing and the Registrar has received a request from the Depository to issue Physical Notes; provided that a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Physical Note or transferred to a Person who takes delivery thereof in the form of a Physical Note prior to (A) the expiration of the Distribution Compliance Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.

(c) Any beneficial interest in one of the Global Notes that is transferred to a person who takes delivery in the form of an interest in another Global Note shall, upon transfer, cease to be an

interest in such Global Note and become a beneficial interest in such other Global Note and, accordingly, shall thereafter be subject to all transfer restrictions, if any, and other procedures applicable to a beneficial interest in such other Global Notes for as long as it remains such an interest.

(d) In connection with any transfer or exchange of a portion of the beneficial interest in the Global Note to beneficial owners pursuant to paragraph (b) of this Section 2.14, the Registrar shall (if one or more Physical Notes are to be issued) reflect on its books and records the date and a decrease in the principal amount of the Global Note in an amount equal to the principal amount of the beneficial interest in the Global Note to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more Physical Notes of like tenor and aggregate principal amount.

(e) In connection with the transfer of an entire Global Note to beneficial owners pursuant to paragraph (b) of this Section 2.14, the Global Notes shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depository in exchange for its beneficial interest in the Global Notes, an equal aggregate principal amount of Physical Notes of authorized denominations.

(f) Any Physical Note constituting a Restricted Security delivered in exchange for an interest in the Global Note pursuant to paragraph (b) or (c) shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section 2.15, bear the legend regarding transfer restrictions applicable to the Physical Notes set forth in Exhibit A, as applicable.

(g) The Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.

(a) Transfers to Non-QIB Institutional Accredited Investors and Non-U.S. Persons. The following provisions shall apply with respect to the registration of any proposed transfer of a Note constituting a Restricted Security to any Institutional Accredited Investor which is not a QIB or to any Non-U.S. Person:

(a) The Company shall, and shall cause each of its Restricted Subsidiaries to, maintain in good working order and condition in all material respects (subject to ordinary wear and tear) its properties that are used or useful in the conduct of its business and that are material to the conduct of such business, and make all necessary repairs, renewals, replacements, additions, betterments and improvements thereto and actively conduct and carry on its business; provided, however, that nothing in

this Section 4.05 shall prevent the Company or any of the Restricted Subsidiaries from discontinuing the operation and maintenance of any of its properties if such discontinuance is, in the good faith judgment of the Board of Directors or other governing body of the Company or the Restricted Subsidiary concerned, as the case may be, desirable in the conduct of its businesses and is not disadvantageous in any material respect to the Holders.

(a) If an Event of Default (other than an Event of Default specified in Section 6.01 above with respect to the Company) shall occur and be continuing and has not been waived, the Trustee or the Holders of at least 25% in principal amount of outstanding Notes may declare the principal of and premium, if any, accrued interest and Additional Interest, if any, on all the Notes to be due and payable by notice in writing to the Company and the Trustee specifying the Event of Default and that it is a “notice of acceleration” (the “Acceleration Notice”), and the same shall become immediately due and payable.

(b) If an Event of Default specified in Section 6.01(6) or (7) above with respect to the Company occurs and is continuing, then all unpaid principal of, and premium, if any, and accrued and unpaid interest and Additional Interest, if any, on all of the outstanding Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

(c) At any time after a declaration of acceleration with respect to the Notes as described in Section 6.02(a) and (b), the Holders of a majority in principal amount of the Notes may rescind and cancel such declaration and its consequences:

(d) No such rescission shall affect any subsequent Default or impair any right consequent thereto.

Section 7.01 Duties of Trustee.

(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise thereof as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

(b) Except during the continuance of an Event of Default:

(c) Notwithstanding anything to the contrary herein contained, the Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any liability. The Trustee shall be under no obligation to exercise of any of its rights or powers under this Indenture or the Collateral Agreements at the request, order or direction of any Holders unless such Holders have offered to the Trustee security and indemnity reasonably satisfactory to the Trustee against the costs and expenses which may be incurred by it in compliance with such request, order or direction.

(e) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01.

(f) The Trustee shall not be liable for interest on any money or assets received by it except as the Trustee may agree in writing with the Company. Money and assets held in trust by the Trustee need not be segregated from other funds or assets held by the Trustee except to the extent required by law.

Section 7.02 Rights of Trustee.

(a) The Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement instrument, opinion, report, request direction, consent, order, bond, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.

(b) Before the Trustee acts or refrains from acting, it may consult with counsel of its selection and may require an Officers’ Certificate or an Opinion of Counsel, or both, which shall conform to Sections 11.04 and 11.05. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel. The written advice of the Trustee’s counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by the Trustee hereunder in good faith and in reliance thereon.

(c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care.

(d) The Trustee shall not be liable for any action that it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers under this Indenture.

(e) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond, debenture, or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled, upon reasonable notice to the Company, to examine the books, records and premises of the Company, personally or by agent or attorney and to consult with the officers and representatives of the Company, including the Company’s accountants and attorneys. Except as expressly stated herein to the contrary, in no event shall the Trustee have any responsibility to ascertain whether there has been compliance with any of the covenants or provisions of Articles Four or Five hereof.

(f) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

(g) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company and any resolution of the Board of Directors shall be sufficient if evidenced by a copy of such resolution certified by an Officer of the Company to have been duly adopted and in full force and effect on the date hereof.

(h) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Trust Officer of the Trustee has actual knowledge thereof or shall have received from the Company, any Guarantor or any other obligor upon the Notes or from any Holder written notice thereof at its address set forth in Section 11.02 hereof, and such notice references the Notes and this Indenture.

(i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

(j) The Trustee may request that the Company deliver an Officers’ Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers’ Certificate may be signed by any persons authorized to sign an Officers’ Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.

(k) The permissive right of the Trustee to take any action under this Indenture or any Collateral Agreements shall not be construed as a duty to so act.

Section 7.03 Individual Rights of Trustee.

Section 7.04 Trustee’s Disclaimer.

Section 7.05 Notice of Default.

Section 7.06 Reports by Trustee to Holders.

Section 7.07 Compensation and Indemnity.

Section 7.08 Replacement of Trustee.

Section 7.09 Successor Trustee by Merger, Etc.

Section 7.10 Eligibility; Disqualification.

(a) This Indenture shall always have a Trustee who satisfies the requirements of TIA Sections 310(a)(1), (2), (3) and (5). The Trustee (or, in the case of a corporation included in a bank holding company system, the related bank holding company) shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. In addition, if the Trustee is a corporation included in a bank holding company system, the Trustee, independently of such bank holding company, shall meet the capital requirements of TIA Section 310(a)(2). The Trustee shall comply with TIA Section 310(b); provided, however, that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met. The provisions of TIA Section 310 shall apply to the Company, as obligor of the Notes.

(b) If the Trustee has or acquires a conflicting interest within the meaning of the TIA, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the TIA and this Indenture.

Section 7.11 Preferential Collection of Claims Against Company.

Section 7.12 Trustee as Paying Agent and Collateral Agent.

Section 7.13 Co-Trustees , Co-Collateral Agent and Separate Trustees and Collateral Agent.

(a) At any time or times, for the purpose of meeting the legal requirements of any jurisdiction in which any of the Collateral may at the time be located, the Company, the Trustee and the Collateral Agent shall have the power to appoint, and, upon the written request of the Trustee, the Collateral Agent or of the Holders of at least 25% in principal amount of the Notes outstanding, the Company shall for such purpose, join with the Trustee or the Collateral Agent, as the case may be, in the execution, delivery and performance of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Trustee either to act as co-trustee, jointly with the Trustee, of all or any part of the Collateral, to act as co-collateral agent, jointly with the Collateral Agent, or to act as separate trustees or Collateral Agent of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power, deemed necessary or desirable, subject to the other provisions of this Section 7.13.

(b) Should any written instrument from the Company be required by any co-trustee, co-collateral agent or separate trustee or separate collateral agent so appointed for more fully confirming to such co-trustee or separate trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Company.

(c) Every co-trustee, co-collateral agent or separate trustee or separate collateral agent shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely:

Section 7.14 Form of Documents Delivered to Trustee.

Section 8.01 Legal Defeasance and Covenant Defeasance.

(a) The Company may, at its option and at any time, elect to have either paragraph (b) or paragraph (c) below be applied to the outstanding Notes upon compliance with the applicable conditions set forth in paragraph (d).

(b) Upon the Company’s exercise under paragraph (a) of the option applicable to this paragraph (b), the Company and the Guarantors shall be deemed to have been released and discharged from their obligations with respect to the outstanding Notes, the Guarantees and the Collateral Agreements on the date the applicable conditions set forth below are satisfied (hereinafter, “Legal Defeasance”). For this purpose, such Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be “outstanding” only for the purposes of the Sections and matters under this Indenture referred to in clause (i) and (ii) below, and the Company and the Guarantors shall be deemed to have satisfied all their other obligations under such Notes and this Indenture, the Guarantees and the Collateral Agreements, except for the following which shall survive until otherwise terminated or discharged hereunder: (i) the rights of Holders of outstanding Notes to receive solely from the trust fund described in paragraph (d) below and as more fully set forth in such paragraph payments in respect of the principal of, and premium, if any, interest and Additional Interest, if any, on such Notes when such payments are due, (ii) obligations listed in Section 8.03, subject to compliance with this Section 8.01 and (iii) the rights, powers, trusts, duties and immunities of the Trustee and the Company’s obligations in connection therewith. The Company may exercise its option under this paragraph (b) notwithstanding the prior exercise of its option under paragraph (c) below with respect to the Notes.

(c) Upon the Company’s exercise under paragraph (a) of the option applicable to this paragraph (c), the Company and its Restricted Subsidiaries shall be released and discharged from their obligations under any covenant contained in Section 4.05, Sections 4.08 through 4.20, Sections 4.22 through 4.23 and Section 5.01(2), with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, “Covenant Defeasance”), and the Notes shall thereafter be deemed to be not “outstanding” for the purpose of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, such Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company’s exercise under paragraph (a) hereof of the option applicable to this paragraph (c), subject to the satisfaction of the conditions set forth in paragraph (d) below, Sections 6.01(3) through 6.01(9) (except, in the case of Section 6.01(6) and 6.01(7), with respect only to Significant Subsidiaries) shall not constitute Events of Default.

(d) The following shall be the conditions to application of either paragraph (b) or paragraph (c) above to the outstanding Notes:

Section 8.02 Satisfaction and Discharge.

Section 8.03 Survival of Certain Obligations.

Section 8.04 Acknowledgment of Discharge by Trustee.

Section 8.05 Application of Trust Moneys.

Section 8.06 Repayment to the Company; Unclaimed Money.

Section 8.07 Reinstatement.

Section 9.01 Without Consent of Holders.

Section 9.02 With Consent of Holders.

Section 9.03 Compliance with TIA.

Section 9.04 Revocation and Effect of Consents.

Section 9.05 Notation on or Exchange of Notes.

Section 9.06 Trustee to Sign Amendments, Etc.

Section 10.01 Guarantee.

Section 10.02 Release of a Guarantor.

Section 10.03 Limitation of Guarantor’s Liability.

Section 10.04 Guarantors May Consolidate, etc., on Certain Terms.

Section 10.05 Contribution.

Section 10.06 Waiver of Subrogation.

Section 10.07 Waiver of Stay, Extension or Usury Laws.

Section 10.08 Evidence of Guarantee.

Section 11.01 TIA Controls.

Section 11.02 Notices.

Section 11.03 Communications by Holders with Other Holders.

Section 11.04 Certificate and Opinion as to Conditions Precedent.

Section 11.05 Statements Required in Certificate or Opinion.

Section 11.06 Rules by Trustee, Paying Agent, Registrar.

Section 11.07 Legal Holidays.

Section 11.08 Governing Law.

Section 11.09 No Adverse Interpretation of Other Agreements.

Section 11.10 No Recourse Against Others.

Section 11.11 Successors.

Section 11.12 Duplicate Originals.

Section 11.13 Severability.

Section 11.14 Waiver of Jury Trial.

Section 12.01 Grant of Security Interest.

(a) To secure the due and punctual payment of the principal of, premium, if any, and interest, or Additional Interest, if any, on the Notes and amounts due hereunder and under the Guarantees when and as the same shall be due and payable, whether on an Interest Payment Date, by acceleration, purchase, repurchase, redemption or otherwise, and interest on the overdue principal of, premium, if any, and interest (to the extent permitted by law), if any, on the Notes and the performance of all other Obligations of the Company and the Guarantors to the Holders, the Collateral Agent or the Trustee under this Indenture, the Collateral Agreements, the Guarantees and the Notes, the Company and the Guarantors hereby covenant to cause the Collateral Agreements to be executed and delivered concurrently with this Indenture. The Collateral Agreements shall provide for the grant by the Company and Guarantors party thereto to the Collateral Agent security interests in the Collateral.

(b) Each Holder, by its acceptance of a Note, (i) appoints the Collateral Agent to act as its agent (and by its signature below, the Collateral Agent accepts such appointment) and (ii) consents and agrees to the terms of each Collateral Agreement and the Intercreditor Agreement, as the same may be in effect or may be amended from time to time in accordance with their respective terms, and authorizes and directs the Collateral Agent to enter into the Collateral Agreements and the Intercreditor Agreement and to perform its obligations and exercise its rights thereunder in accordance therewith. The Company shall, and shall cause each of its Restricted Subsidiaries to, do or cause to be done, at its sole cost and expense, all such actions and things as may be necessary or proper, or as may be required by the provisions of the Collateral Agreements and the Intercreditor Agreement, to assure and confirm to the Collateral Agent the security interests in the Collateral contemplated hereby and by the Collateral Agreements and the Intercreditor Agreement, as from time to time constituted, so as to render the same available for the security and benefit of this Indenture and of the Notes and Guarantees secured hereby, according to the intent and purpose herein and therein expressed. The Company shall, and shall cause

each of its Restricted Subsidiaries to, take any and all actions required or as may be requested by the Collateral Agent to cause the Collateral Agreements to create and maintain, as security for the Obligations contained in this Indenture, the Notes, the Collateral Agreements and the Guarantees valid and enforceable, perfected (except as expressly provided herein or therein) security interests in and on all the Collateral, in favor of the Collateral Agent, superior to and prior to the rights of all third Persons, and subject to no other Liens, in each case, except as expressly provided herein or therein.

Section 12.02 Recording and Opinions.

(a) The Company shall, and shall cause each of its Restricted Subsidiaries to, at its sole cost and expense, take or cause to be taken all action required to perfect, maintain, preserve and protect the security interests in the Collateral granted by the Collateral Agreements, including (i) the filing of financing statements, continuation statements, collateral assignments and any instruments of further assurance, in such manner and in such places as may be required by law to preserve and protect fully the rights of the Holders, the Collateral Agent, and the Trustee under this Indenture and the Collateral Agreements to all property comprising the Collateral, and (ii) the delivery of the certificates evidencing the securities pledged under the Security Agreement, duly endorsed in blank or accompanied by undated stock powers or other instruments of transfer executed in blank, it being understood that concurrently with the execution of this Indenture the Company and its Restricted Subsidiaries have delivered financing statements for filing by the Initial Purchaser or its agents. The Company shall from time to time promptly pay all financing and continuation statement recording and/or filing fees, charges and recording and similar taxes relating to this Indenture, the Collateral Agreements and any amendments hereto or thereto and any other instruments of further assurance required pursuant hereto or thereto.

(b) The Company shall furnish to the Trustee and the Collateral Agent (if other than the Trustee), on or within one month of May 15 of each year, commencing May 15, 2005, an Opinion of Counsel either (i) stating that, in the opinion of such counsel, all action necessary to perfect or continue the perfection of the security interests created by the Collateral Agreements and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given have been taken or (ii) stating that, in the Opinion of such Counsel, no such action is necessary to perfect or continue the perfection of any security interest created under any of the Collateral Agreements.

Section 12.03 Release of Collateral.

(a) The Collateral Agent shall not at any time release Collateral from the security interests created by the Collateral Agreements unless such release is in accordance with the provisions of this Indenture and the applicable Collateral Agreements.

(b) At any time when a Default or an Event of Default shall have occurred and be continuing, no release of Collateral pursuant to the provisions of this Indenture and the Collateral Agreements (except to the extent specifically provided in any such provision) shall be effective as against the Holders.

(c) The release of any Collateral from the terms of the Collateral Agreements shall not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and to the extent the Collateral is released pursuant to this Indenture and the Collateral Agreements. To the extent applicable, the Company shall cause TIA Section 314(d) relating to the release of property from the security interests created by this Indenture and the Collateral Agreements to be complied with. Any certificate or opinion required by TIA Section 314(d) may be made by an Officer of the Company, except in cases where TIA Section 314(d) requires that such certificate or opinion be made by an independent Person, which Person shall be an independent engineer, appraiser or other expert selected or

approved by the Trustee in the exercise of reasonable care. A Person is “independent” if such Person (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Company or in any Affiliate of the Company and (c) is not an officer, employee, promoter, underwriter, trustee, partner or director or person performing similar functions to any of the foregoing for the Company. The Trustee and the Collateral Agent shall be entitled to receive and rely upon a certificate provided by any such Person confirming that such Person is independent within the foregoing definition.

(d) Notwithstanding any provision to the contrary herein, Collateral comprised of accounts receivable, inventory or (prior to the occurrence and during the continuance of an Event of Default) the proceeds of the foregoing shall be subject to release upon sales of such inventory and collection of the proceeds of such accounts receivable in the ordinary course of business. If requested in writing by the Company, the Trustee shall instruct the Collateral Agent to execute and deliver such documents, instruments and statements and to take all such other actions promptly upon receipt of such instructions from the Trustee as the Company may reasonably request to evidence or confirm that the Collateral falling under this Section 12.03 has been released from the Liens of each of the Collateral Agreements. The Collateral Agent shall execute and deliver such documents, instruments and statements and shall take all such actions promptly upon receipt of such instructions from the Trustee.

Section 12.04 Specified Releases of Collateral.

Section 12.05 Release upon Satisfaction or Defeasance of all Outstanding Obligations.

Section 12.06 Form and Sufficiency of Release.

Section 12.07 Purchaser Protected.

Section 12.08 Authorization of Actions to be Taken by the Collateral Agent Under the Collateral Agreements.

Section 12.09 Authorization of Receipt of Funds by the Trustee Under the Collateral Agreements.

Section 12.10 Intercreditor Agreement.

Sunday, December 30, 2001

0001047469-05-014790.txt : 20160322 0001047469-05-014790.hdr.sgml : 20160322 20050513174104 ACCESSION NUMBER: 0001047469-05-014790 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 67 FILED AS OF DATE: 20050516 DATE AS OF CHANGE: 20060123 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Altra Industrial Motion, Inc. CENTRAL INDEX KEY: 0001319916 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT, NEC [3569] IRS NUMBER: 300283143 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-124944 FILM NUMBER: 05830801 BUSINESS ADDRESS: STREET 1: 300 GRANITE STREET STREET 2: SUITE 201 CITY: BRAINTREE STATE: MA ZIP: 02184 BUSINESS PHONE: 781-917-0600 MAIL ADDRESS: STREET 1: 300 GRANITE STREET STREET 2: SUITE 201 CITY: BRAINTREE STATE: MA ZIP: 02184 FORMER COMPANY: FORMER CONFORMED NAME: Altra Industrial Motion, Inc. DATE OF NAME CHANGE: 20050304 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Warner Electric LLC CENTRAL INDEX KEY: 0001321806 IRS NUMBER: 541967089 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-124944-11 FILM NUMBER: 05830810 BUSINESS ADDRESS: STREET 1: 449 GARDNER STREET CITY: SOUTH BELOIT STATE: IL ZIP: 61080 BUSINESS PHONE: 617.689.6380 MAIL ADDRESS: STREET 1: 449 GARDNER STREET CITY: SOUTH BELOIT STATE: IL ZIP: 61080 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Warner Electric International Holding, Inc. CENTRAL INDEX KEY: 0001321818 IRS NUMBER: 541967086 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-124944-04 FILM NUMBER: 05830803 BUSINESS ADDRESS: STREET 1: C/O ALTRA INDUSTRIAL MOTION STREET 2: 14 HAYWARD STREET CITY: QUINCY STATE: MA ZIP: 02171 BUSINESS PHONE: 617.689.6380 MAIL ADDRESS: STREET 1: C/O ALTRA INDUSTRIAL MOTION STREET 2: 14 HAYWARD STREET CITY: QUINCY STATE: MA ZIP: 02171 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Nuttall Gear, LLC CENTRAL INDEX KEY: 0001321813 IRS NUMBER: 541856788 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-124944-05 FILM NUMBER: 05830804 BUSINESS ADDRESS: STREET 1: 2221 NIAGARA FALLS BOULEVARD CITY: NIAGARA FALLS STATE: NY ZIP: 14302 BUSINESS PHONE: 617.689.6380 MAIL ADDRESS: STREET 1: 2221 NIAGARA FALLS BOULEVARD CITY: NIAGARA FALLS STATE: NY ZIP: 14302 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Formsprag LLC CENTRAL INDEX KEY: 0001321805 IRS NUMBER: 010712538 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-124944-08 FILM NUMBER: 05830807 BUSINESS ADDRESS: STREET 1: 23601 HOOVER ROAD CITY: WARREN STATE: MI ZIP: 48089 BUSINESS PHONE: 617.689.6380 MAIL ADDRESS: STREET 1: 23601 HOOVER ROAD CITY: WARREN STATE: MI ZIP: 48089 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN ENTERPRISES MPT CORP CENTRAL INDEX KEY: 0001242646 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-124944-02 FILM NUMBER: 05830800 BUSINESS ADDRESS: STREET 1: 8730 STONY POINT PARKWAY CITY: RICHMOND STATE: VA ZIP: 23235 BUSINESS PHONE: 804-560-4070 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Kilian CO CENTRAL INDEX KEY: 0001321910 IRS NUMBER: 201681824 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-124944-07 FILM NUMBER: 05830806 BUSINESS ADDRESS: STREET 1: C/O ALTRA INDUSTRIAL MOTION STREET 2: 14 HAYWARD STREET CITY: QUINCY STATE: MA ZIP: 02171 BUSINESS PHONE: 617.689.6380 MAIL ADDRESS: STREET 1: C/O ALTRA INDUSTRIAL MOTION STREET 2: 14 HAYWARD STREET CITY: QUINCY STATE: MA ZIP: 02171 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Boston Gear LLC CENTRAL INDEX KEY: 0001321880 IRS NUMBER: 113723980 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-124944-09 FILM NUMBER: 05830808 BUSINESS ADDRESS: STREET 1: 14 HAYWARD STREET CITY: QUINCY STATE: MA ZIP: 02171 BUSINESS PHONE: 617.689.6380 MAIL ADDRESS: STREET 1: 14 HAYWARD STREET CITY: QUINCY STATE: MA ZIP: 02171 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Warner Electric Technology LLC CENTRAL INDEX KEY: 0001321819 IRS NUMBER: 541967086 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-124944-03 FILM NUMBER: 05830802 BUSINESS ADDRESS: STREET 1: C/O ALTRA INDUSTRIAL MOTION STREET 2: 14 HAYWARD STREET CITY: QUINCY STATE: MA ZIP: 02171 BUSINESS PHONE: 617.689.6380 MAIL ADDRESS: STREET 1: C/O ALTRA INDUSTRIAL MOTION STREET 2: 14 HAYWARD STREET CITY: QUINCY STATE: MA ZIP: 02171 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Ameridrives International, L.P. CENTRAL INDEX KEY: 0001321810 IRS NUMBER: 541826102 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-124944-10 FILM NUMBER: 05830809 BUSINESS ADDRESS: STREET 1: 1802 PITTSBURGH AVENUE CITY: ERIE STATE: PA ZIP: 16502 BUSINESS PHONE: 617.689.6380 MAIL ADDRESS: STREET 1: 1802 PITTSBURGH AVENUE CITY: ERIE STATE: PA ZIP: 16502 FORMER COMPANY: FORMER CONFORMED NAME: Ameridrives International, L.P. DATE OF NAME CHANGE: 20050325 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Kilian Manufacturing CORP CENTRAL INDEX KEY: 0001321911 IRS NUMBER: 060933715 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-124944-06 FILM NUMBER: 05830805 BUSINESS ADDRESS: STREET 1: 1728 BURNET AVENUE STREET 2: PO BOX 6974 (13217) CITY: SYRACUSE STATE: NY ZIP: 13206 BUSINESS PHONE: 617.689.6380 MAIL ADDRESS: STREET 1: 1728 BURNET AVENUE STREET 2: PO BOX 6974 (13217) CITY: SYRACUSE STATE: NY ZIP: 13206 FILER: COMPANY DATA: COMPANY CONFORMED NAME: American Enterprises MPT Holdings, L.P. CENTRAL INDEX KEY: 0001321808 IRS NUMBER: 522005171 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-124944-01 FILM NUMBER: 05830799 BUSINESS ADDRESS: STREET 1: C/O ALTRA INDUSTRIAL MOTION STREET 2: 14 HAYWARD STREET CITY: QUINCY STATE: MA ZIP: 02171 BUSINESS PHONE: 617.689.6380 MAIL ADDRESS: STREET 1: C/O ALTRA INDUSTRIAL MOTION STREET 2: 14 HAYWARD STREET CITY: QUINCY STATE: MA ZIP: 02171 FORMER COMPANY: FORMER CONFORMED NAME: American Enterprises MPT Holdings, L.P. DATE OF NAME CHANGE: 20050325 S-4 1 a2155511zs-4.htm S-4
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As filed with the Securities and Exchange Commission on May 13, 2005

Registration No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Altra Industrial Motion, Inc.

Delaware (State or Other Jurisdiction of Incorporation or Organization)	3568 (Primary Standard Industrial Classification Code Number)	30-0283143 (I.R.S. Employer Identification No.)
14 Hayward Street Quincy, Massachusetts 02171 (617) 328-3300 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)
Michael L. Hurt Chief Executive Officer Altra Industrial Motion, Inc. 14 Hayward Street Quincy, Massachusetts 02171 (617) 328-3300 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

See Table of Additional Registrants Below

*Copies to:*
Todd R. Chandler, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 (212) 310-8000

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date of this registration statement.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered	Proposed Maximum Offering Price Per Unit	Proposed Maximum Aggregate Offering Price(1)	Amount of Registration Fee


9% Senior Secured Notes due 2011	$165,000,000	100%	$165,000,000	$19,421

Guarantees of 9% Senior Secured Notes due 2011	—	—	—	—(2)

(1): Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(f) under the Securities Act of 1933, as amended.
(2): The additional registrants will guarantee the payment of the 9% Senior Secured Notes due 2011. Pursuant to Section 457(n) of the Securities Act, no separate registration fee for the guarantees is payable.

The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

ADDITIONAL REGISTRANTS

Exact Name of Registrant as Specified in Its Charter	State or Other Jurisdiction of Incorporation or Organization	Primary Standard Industrial classification Code Number	I.R.S. Employer Identification No.
American Enterprises MPT Corp.	Delaware	3568	52-2005169
American Enterprises MPT Holdings, L.P.	Delaware	3568	52-2005171
Ameridrives International, L.P.	Delaware	3568	54-1826102
Boston Gear LLC	Delaware	3568	11-3723980
Formsprag LLC	Delaware	3568	01-0712538
The Kilian Company	Delaware	3568	20-1681824
Kilian Manufacturing Corporation	Delaware	3568	06-0933715
Nuttall Gear L L C	Delaware	3568	54-1856788
Warner Electric LLC	Delaware	3568	54-1967089
Warner Electric Technology LLC	Delaware	3568	54-1967084
Warner Electric International Holding, Inc.	Delaware	3568	54-1967086

The address, including zip code, and telephone number, including area code, of the principal corporate offices for each of the additional registrants is:

14 Hayward Street
Quincy, Massachusetts 02171
(617) 328-3300

The name, address, including zip code, and telephone number, including area code, of the registered agent for service of process for each of the additional registrants is:

Michael L. Hurt
Chief Executive Officer
Altra Industrial Motion, Inc.
14 Hayward Street
Quincy, Massachusetts 02171
(617) 328-3300

The information in this prospectus is not complete and may be changed. We may not sell or offer these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, Dated May 13, 2005

PROSPECTUS

(ALTRA LOGO)

Offer to exchange all outstanding
$165,000,000 principal amount of
9% Senior Secured Notes due 2011

for

$165,000,000 principal amount of
9% Senior Secured Notes due 2011
registered under the Securities Act of 1933

We are offering to exchange our outstanding notes described above for the new, registered notes described above. In this prospectus we refer to the outstanding notes as the "old notes" and our new notes as the "registered notes," and we refer to the old notes and the registered notes, together, as the "notes." The form and terms of the registered notes are identical in all material respects to the form and terms of the old notes, except for transfer restrictions, registration rights and additional interest payment provisions relating only to the old notes. We do not intend to apply to have any notes listed on any securities exchange or automated quotation system and there may be no active trading market for them.

Material Terms of the Exchange Offer

•: The exchange offer expires at 5:00 p.m., New York City time, on , 2005, unless extended. Whether or not the exchange offer is extended, the time at which it ultimately expires is referred to in this prospectus as the time of expiration.
•: The only conditions to completing the exchange offer are that the exchange offer not violate any applicable law, regulation or interpretation of the staff of the Securities and Exchange Commission and that no injunction, order or decree of any court or governmental agency that would prohibit, prevent or otherwise materially impair our ability to proceed with the exchange offer shall be in effect.
•: All old notes that are validly tendered and not validly withdrawn will be exchanged.
•: Tenders of old notes in the exchange offer may be withdrawn at any time prior to the time of expiration.
•: We will not receive any cash proceeds from the exchange offer.

None of our affiliates, no broker-dealers that acquired old notes directly from us and no persons engaged in a distribution of registered notes may participate in the exchange offer. Any broker-dealer that acquired old notes as a result of market-making or other trading activities and receives registered notes for its own account in exchange for those old notes must acknowledge that it will deliver a prospectus in connection with any resale of those registered notes. The letter of transmittal states that, by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer for that purpose. We have agreed that, for a period ending on the earlier of (a) 180 days after the time of expiration and (b) the date on which broker-dealers are no longer required to deliver a prospectus in connection with market-making or other trading activities, we will make this prospectus available to any broker-dealer for use in connection with any resales by that broker-dealer. See "Plan of Distribution."

Consider carefully the "Risk Factors" beginning on page 12 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is , 2005

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with any information or represent anything about us, our financial results or this exchange offer that is not contained in this prospectus. If given or made, any such other information or representation should not be relied upon as having being authorized by us. We are not making an offer to sell securities in any jurisdiction where the offer or sale is not permitted.

In this prospectus, we rely on and refer to information regarding market data obtained from internal surveys, market research, publicly available information and industry publications.

NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS AN OFFER TO EXCHANGE ONLY THE NOTES OFFERED HEREBY, BUT ONLY UNDER CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CURRENT ONLY AS OF ITS DATE. UNTIL , 2005, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OF SUBSCRIPTIONS.

TABLE OF CONTENTS

		PAGE
Prospectus Summary		1
Risk Factors		12
Disclosure Regarding Forward-Looking Statements		26
The Exchange Offer		27
Use of Proceeds		35
Capitalization		36
Unaudited Pro Forma Financial Statements		37
Selected Historical Financial Data		39
Management's Discussion and Analysis of Financial Condition and Results of Operations		41
Business		52
Management and Directors		60
Security Ownership of Certain Beneficial Owners and Management		67
Certain Relationships and Related Party Transactions		69
Description of Certain Indebtedness		71
Description of Notes		73
United States Federal Income Tax Consequences		114
Plan of Distribution		115
Legal Matters		116
Experts		116
Available Information		116
Index to Consolidated Financial Statements		F-1

PROSPECTUS SUMMARY

This summary highlights selected information about us. This is only a summary and does not contain all of the information that may be important to you. In addition to this summary, you should carefully read this prospectus in its entirety before making an investment decision. In particular, you should read the section titled "Risk Factors" and "Management's Discussion and Analysis of Results of Operations and Financial Condition" and the consolidated financial statements and notes related to those statements included elsewhere in this prospectus. In this prospectus, unless the context requires otherwise, references to "Altra," "we," "us" and "our" refer to Altra Industrial Motion, Inc. and its wholly owned subsidiaries. References to "Altra Holdings" refer to Altra Industrial Holdings, Inc., our parent company.

Our Company

We are a leading multinational designer, producer and marketer of a wide range of mechanical power transmission products. We sell our products in over 70 countries to over 400 direct OEM customers and over 3,000 distributor outlets through our direct sales force consisting of over 250 sales and marketing personnel and our independent sales representatives. Our products are frequently used in critical applications, such as fail-safe brakes for elevators, wheelchairs and forklifts. We also provide products for use in a wide variety of high-volume manufacturing processes, where the reliability and accuracy of our products are critical in both avoiding costly down time and enhancing the overall efficiency of manufacturing operations.

We market our products under our well recognized and established manufacturing brand names, many of which have achieved the #1 or #2 position in terms of brand awareness in their respective product categories according to a 2003 Motion Systems Design magazine survey. Our leading brands are Ameridrives, Boston Gear, Warner Electric, Formsprag Clutch, Industrial Clutch, Kilian, Marland Clutch, Nuttall Gear, Stieber and Wichita Clutch. All of these brands have been in existence for over 50 years.

Industry Overview

Based on industry data supplied by Penton Information Services, or Penton, we estimate that industrial power transmission products generated worldwide revenues of approximately $57 billion in 2003, of which approximately $25 billion was generated in the United States. These products are used to generate, transmit, control and transform mechanical energy. The industrial power transmission industry can be divided into three segments: mechanical power transmission products, motors and generators and adjustable speed drives. We compete primarily in the mechanical power transmission segment which, based on industry data, we estimate was a $29 billion global market in 2003, of which approximately 57% was represented by aftermarket parts revenues. According to The Freedonia Group, Inc., an independent market research firm, the mechanical power transmission components subsegment is expected to increase 6.1% compounded annually from 2003 to 2008.

The global mechanical power transmission market is highly fragmented, with over 1,000 small manufacturers. While smaller companies tend to be focused on regional niche markets with narrow product lines, larger companies that generate sales over $100 million offer a much broader range of products and have global capabilities. The industry's customer base is broadly diversified across many sectors of the economy and typically places a premium on factors such as quality, reliability, availability and design and application engineering support. We believe the most successful industry participants are those that can leverage their distribution network, their products' reputations for quality and reliability and their service and technical support capabilities to maintain attractive margins on products and gain market share.

Business Strengths

We believe the following business strengths have allowed us to develop and maintain a leading position within the mechanical power transmission industry:

•: Leading Brand Awareness.
•: Strong Distribution Channels.
•: Large Installed Base of Products with Stable, Recurring Revenue Streams.
•: Diversified Revenue Base.
•: Proven Operational Efficiencies.
•: Experienced Senior Management Team.

Business Strategy

By pursuing the following strategies, we intend to continue to increase our sales through a combination of organic growth and acquisitions while improving our profitability through strategic cost reduction initiatives.

•

Increase Market Share in our Existing Markets by:

•: Leveraging our Sales and Distribution Network;
•: Focusing on Strategic Marketing; and
•: Accelerating New Product and Technology Development.

•

Capitalize on Growth and Sourcing Opportunities in the Asia-Pacific Market.

•

Continue to Improve Operational and Manufacturing Efficiencies.

•

Selectively Pursue Acquisition, Alliance and Partnership Opportunities.

Risk Factors

Our ability to attain our objectives depends upon our success in addressing risks relating to our business and the industries we serve, including the following:

•: We operate in the highly competitive mechanical power transmission industry.
•: Our business is impacted by general economic conditions and we serve customers in cyclical industries.
•: We may have difficulty predicting future operating results due to both internal and external factors affecting our business and operations.
•: We rely on independent distributors.
•: We are subject to risks associated with changing technology and manufacturing techniques, which could place us at a competitive disadvantage.
•: Our international operations are subject to uncertainties that could affect our operating results.
•: Because we sell our products on a purchase order basis and rely on estimated forecasts of our OEM customers' needs, inaccurate forecasts could adversely affect our business.
•: The materials used to produce our products are subject to price fluctuations that could increase costs of production and adversely affect profitability.

•: Our future success depends on our ability to effectively integrate acquired companies and manage our growth.

Our Principal Equity Sponsor

Genstar Capital, L.P., or Genstar Capital, is a financial sponsor, formed in 1988 and based in San Francisco, with over $900 million of committed capital under management and has significant experience operating and investing in businesses. Genstar Capital's strategy is to make control-oriented investments or acquire companies with $50 million to $500 million in revenues in a variety of growth, buyout, recapitalization and consolidation transactions.

The Acquisition and Related Transactions

The Acquisition. On October 25, 2004, Altra Holdings, Inc., or Altra Holdings, a company formed at the direction of Genstar Capital and formerly named CPT Acquisition Corp., entered into a purchase agreement with Warner Electric Holding, Inc. and Colfax Corporation. Pursuant to the purchase agreement, Altra Holdings agreed to acquire Power Transmission Holding LLC, or PTH, for $180.0 million. PTH was organized in June 2004 to be the holding company for a group of companies comprising the power transmission business of Colfax Corporation. Altra Holdings assigned its rights and obligations under the purchase agreement to us and we funded the purchase price and related fees and expenses through (i) $40.0 million of equity and other investments by affiliates of Genstar Capital and other investors through Altra Holdings and (ii) the net proceeds of the offering of the old notes. On November 30, 2004, the closing of the acquisition, PTH was merged with and into us and its subsidiaries became our direct or indirect wholly owned subsidiaries. We refer to the acquisition of PTH as the "Acquisition."

Related Transactions. On October 22, 2004, The Kilian Company, or Kilian, a company formed at the direction of Genstar Capital, acquired Kilian Manufacturing Corporation from Timken U.S. Corporation and Kilian Holdings, Inc. Kilian financed the purchase price through (i) an $8.8 million equity investment by Genstar Capital and other investors and (ii) $13.0 million in borrowings under credit facilities. At the consummation of the Acquisition, (i) all of the outstanding shares of Kilian capital stock were exchanged for approximately $8.8 million of shares of Holdings capital stock and Kilian, then a subsidiary of Holdings, and its subsidiaries were transferred to us and become our direct or indirect wholly owned subsidiaries and (ii) net proceeds from the offering of the old notes were used to repay all of Kilian's outstanding borrowings (approximately $12.2. million) assumed by us when Kilian became our wholly owned subsidiaries.

We refer to the Acquisition, the transfer to us of Kilian and its subsidiaries, entering into our senior revolving credit facility, the use of proceeds from the offering of the old notes and other equity investments as the "Acquisition and Related Transactions."

Altra Industrial Motion, Inc. is a Delaware corporation and wholly owned subsidiary of Altra Holdings. Our headquarters are located at 14 Hayward St., Quincy, Massachusetts 02171 and our telephone number is (617) 328-3300. Altra Holdings is owned by affiliates of Genstar Capital, Caisse de depot et placement du Quebec and certain members of our senior management. For more information on the beneficial ownership of Altra Holdings, see "Security Ownership of Certain Beneficial Owners and Management."

Summary of the Terms of the Exchange Offer

On November 30, 2004, we issued $165.0 million aggregate principal amount of 9% Senior Secured Notes due 2011 in a transaction exempt from registration under the Securities Act of 1933. We refer to the issuance of the old notes in this prospectus as the "original issuance."

At the time of the original issuance, we entered into an agreement in which we agreed to register new notes, with substantially the same form and terms of the old notes, and to offer to exchange the registered notes for the old notes. This agreement is referred to in this prospectus as the "registration rights agreement."

Unless you are a broker-dealer and so long as you satisfy the conditions set forth below under "—Resales of the Registered Notes," we believe that the registered notes to be issued to you in the exchange offer may be resold by you without compliance with the registration and prospectus delivery provisions of the Securities Act. You should read the discussions under the headings "The Exchange Offer" for further information regarding the exchange offer.

Registration Rights Agreement		Under the registration rights agreement, we are obligated to offer to exchange the old notes for registered notes with terms identical in all material respects to the old notes. The exchange offer is intended to satisfy that obligation. After the exchange offer is complete, except as set forth in the next paragraph, you will no longer be entitled to any exchange or registration rights with respect to your old notes.
		The registration rights agreement requires us to file a registration statement for a continuous offering in accordance with Rule 415 under the Securities Act for your benefit if you would not receive freely tradeable registered notes in the exchange offer or you are ineligible to participate in the exchange offer and indicate that you wish to have your old notes registered under the Securities Act.
The Exchange Offer		We are offering to exchange $1,000 principal amount of 9% Senior Secured Notes due 2011, which have been registered under the Securities Act, for each $1,000 principal amount of unregistered 9% Senior Secured Notes due 2011 that were issued in the original issuance.
		In order to be exchanged, an old note must be validly tendered and accepted. All old notes that are validly tendered and not validly withdrawn before the time of expiration will be accepted and exchanged.
		As of this date, there are $165.0 million aggregate principal amount of old notes outstanding.
		We will issue the registered notes promptly after the time of expiration.

Resales of the Registered Notes	Except as described below, we believe that the registered notes to be issued in the exchange offer may be offered for resale, resold and otherwise transferred by you without compliance with the registration and (except with respect to broker-dealers) prospectus delivery provisions of the Securities Act if (but only if) you meet the following conditions:
	•	you are not an "affiliate" of us, as that term is defined in Rule 405 under the Securities Act.
	•	if you are a broker-dealer, you acquired the old notes which you seek to exchange for registered notes as a result of market making or other trading activities and not directly from us and you comply with the prospectus delivery requirements of the Securities Act;
	•	the registered notes are acquired by you in the ordinary course of your business;
	•	you are not engaging in and do not intend to engage in a distribution of the registered notes; and
	•	you do not have an arrangement or understanding with any person to participate in the distribution of the registered notes.
	Our belief is based on interpretations by the staff of the Securities and Exchange Commission (the "SEC"), as set forth in no-action letters issued to third parties unrelated to us. The staff has not considered the exchange offer in the context of a no-action letter, and we cannot assure you that the staff would make a similar determination with respect to the exchange offer.
	If you do not meet the above conditions, you may not participate in the exchange offer or sell, transfer or otherwise dispose of any old notes unless (i) they have been registered for resale by you under the Securities Act and you deliver a "resale" prospectus meeting the requirements of the Securities Act or (ii) you sell, transfer or otherwise dispose of the registered notes in accordance with an applicable exemption from the registration requirements of the Securities Act.
	Any broker-dealer that acquired old notes as a result of market-making activities or other trading activities, and receives registered notes for its own account in exchange for old notes, must acknowledge that it will deliver a prospectus in connection with any resale of the registered notes. See "Plan of Distribution." A broker-dealer may use this prospectus for an offer to resell or to otherwise transfer those registered notes for a period of 180 days after the time of expiration.

Time of Expiration	The exchange offer will expire at 5:00 p.m., New York City time, on , 2005, unless we decide to extend the exchange offer. We do not intend to extend the exchange offer, although we reserve the right to do so.
Conditions to the Exchange Offer	The only conditions to completing the exchange offer are that the exchange offer not violate any applicable law, regulation or applicable interpretation of the staff of the SEC and that no injunction, order or decree of any court or any governmental agency that would prohibit, prevent or otherwise materially impair our ability to proceed with the exchange offer shall be in effect. See "The Exchange Offer—Conditions."
Procedures for Tendering Old Notes Held in the Form of Book-Entry Interests	The old notes were issued as global notes in fully registered form. Beneficial interests in the old notes held by direct or indirect participants in The Depository Trust Company, or DTC, are shown on, and transfers of those interests are effected only through, records maintained in book-entry form by DTC with respect to its participants.
	If you hold old notes in the form of book-entry interests and you wish to tender your old notes for exchange pursuant to the exchange offer, you must transmit to the exchange agent on or prior to the time of expiration of the exchange offer either:
	•	a written or facsimile copy of a properly completed and duly executed letter of transmittal, including all other documents required by such letter of transmittal, at the address set forth on the cover page of the letter of transmittal; or
	•	a computer-generated message transmitted by means of DTC's Automated Tender Offer Program system and received by the exchange agent and forming a part of a confirmation of book-entry transfer, in which you acknowledge and agree to be bound by the terms of the letter of transmittal.
	The exchange agent must also receive on or prior to the expiration of the exchange offer either:
	•	a timely confirmation of book-entry transfer of your old notes into the exchange agent's account at DTC pursuant to the procedure for book-entry transfers described in this prospectus under the heading "The Exchange Offer—Book-Entry Transfer;" or
	•	the documents necessary for compliance with the guaranteed delivery procedures described below.

	A letter of transmittal for your notes accompanies this prospectus. By executing the letter of transmittal or delivering a computer-generated message through DTC's Automated Tender Offer Program system, you will represent to us that, among other things:
	•	you are not an affiliate of us;
	•	you are not a broker-dealer who acquired the old notes that you are sending to the issuer directly from the issuer;
	•	the registered notes to be acquired by you in the exchange offer are being acquired in the ordinary course of your business;
	•	you are not engaging in and do not intend to engage in a distribution of the registered notes; and
	•	you do not have an arrangement or understanding with any person to participate in the distribution of the registered notes.
Procedures for Tendering Certificated Old Notes	If you are a holder of book-entry interests in the old notes, you are entitled to receive, in limited circumstances, in exchange for your book-entry interests, certificated notes which are in equal principal amounts to your book-entry interests. See "Description of Notes—Exchanges of Book-Entry Notes for Certificated Notes." If you acquire certificated old notes prior to the expiration of the exchange offer, you must tender your certificated old notes in accordance with the procedures described in this prospectus under the heading "The Exchange Offer—Procedures for Tendering—Certificated Old Notes."
Special Procedures for Beneficial Owners	If you are the beneficial owner of old notes and they are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your old notes, you should contact the registered holder promptly and instruct the registered holder to tender on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your old notes, either make appropriate arrangements to register ownership of the old notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. See "The Exchange Offer—Procedures for Tendering—Procedures Applicable to All Holders."
Guaranteed Delivery Procedures	If you wish to tender your old notes in the exchange offer and:
	(1)	they are not immediately available;

	(2)	time will not permit your old notes or other required documents to reach the exchange agent before the expiration of the exchange offer; or
	(3)	you cannot complete the procedure for book-entry transfer on a timely basis,
	you may tender your old notes in accordance with the guaranteed delivery procedures set forth in "The Exchange Offer—Procedures for Tendering—Guaranteed Delivery Procedures."
Acceptance of Old Notes and Delivery of Registered Notes	Except under the circumstances described above under "The Exchange Offer—Conditions," the issuer will accept for exchange any and all old notes which are properly tendered prior to the time of expiration. The registered notes to be issued to you in the exchange offer will be delivered promptly following the time of expiration. See "The Exchange Offer—Terms of the Exchange Offer."
Withdrawal	You may withdraw the tender of your old notes at any time prior to the time of expiration. We will return to you any old notes not accepted for exchange for any reason without expense to you as promptly after withdrawal, rejection of tender or termination of the exchange offer.
Exchange Agent	The Bank of New York Trust Company, N.A. is serving as the exchange agent in connection with the exchange offer.
Consequences of Failure to Exchange	If you do not participate in the exchange offer for your old notes, upon completion of the exchange offer, the liquidity of the market for your old notes could be adversely affected. See "The Exchange Offer—Consequences of Failure to Exchange."
United States Federal Income Tax Consequences of the Exchange Offer	The exchange of old notes for registered notes in the exchange offer will not be a taxable event for United States federal income tax purposes. See "United States Federal Income Tax Consequences."

Summary of Terms of the Registered Notes

The form and terms of the registered notes are the same as the form and terms of the old notes, except that the registered notes will be registered under the Securities Act and will not have the same registration rights or additional interest payment provisions. The registered notes represent the same debt as the old notes. Both the old notes and the registered notes are governed by the same indenture.

The summary below describes the principal terms of the registered notes. Some of the terms and conditions described below are subject to important limitations and exceptions. The "Description of Notes" section of this prospectus contains a more detailed description of the terms and conditions of the registered notes.

Issuer		Altra Industrial Motion, Inc.
Securities Offered		$165,000,000 aggregate principal amount of 9% Senior Secured Notes due 2011.
Maturity		December 1, 2011.
Interest Rate and Interest Payment Dates		We will pay interest on the registered notes at an annual rate of 9%. We will make interest payments in cash, in arrears, on June 1 and December 1 of each year, beginning on June 1, 2005.
Guarantees		The registered notes will be unconditionally guaranteed on a senior basis by all of our existing and future domestic restricted subsidiaries. The registered notes will be structurally subordinated to all of the existing and future liabilities of our subsidiaries that do not guarantee the registered notes, including all of our foreign subsidiaries.
Ranking		The registered notes will be senior obligations and will rank equally in right of payment to all of our existing and future senior indebtedness and senior in right of payment to all of our existing and future subordinated indebtedness. The guarantees will be senior obligations of the subsidiary guarantors and will rank equally in right of payment to all of our subsidiary guarantors' existing and future senior indebtedness and senior in right of payment to all of our subsidiary guarantors' existing and future subordinated indebtedness.

Security		The registered notes and the guarantees will be secured by a second priority lien on substantially all of our assets and the assets of the subsidiary guarantors (other than mortgages on existing and future owned real property in the State of New York). Pursuant to the terms of an intercreditor agreement, the security interests securing the registered notes will be subject to first priority liens securing our senior revolving credit facility and any successor credit facility. The registered notes and the guarantees will be effectively subordinated to borrowings under our $30.0 million senior revolving credit facility and the guarantees of that facility, to the extent of the value of the collateral securing that facility, and to purchase money indebtedness, capital lease obligations, secured acquired indebtedness and other secured indebtedness permitted to be incurred under the indenture governing the registered notes, to the extent of the assets securing such indebtedness.
Optional Redemption		On or after December 1, 2008, we may redeem some or all of the registered notes at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest to the date of redemption:

		For the period below		Percentage
		From December 1, 2008 through November 30, 2009		104.500%
		From December 1, 2009 through November 30, 2010		102.250%
		December 1, 2010 and thereafter		100.000%

	Prior to December 1, 2007, up to 35% of the aggregate principal amount of the registered notes originally issued under the indenture governing the registered notes may be redeemed at our option with the net proceeds of certain equity offerings at 109% of their principal amount, plus accrued and unpaid interest to the date of redemption, provided at least 65% of the aggregate principal amount of the registered notes originally issued under the indenture governing the registered notes remain outstanding.
Change of Control Offer	If we experience a change of control, we must give holders of the registered notes the opportunity to sell us their registered notes at 101% of the principal amount thereof, plus accrued and unpaid interest.
Asset Sale Proceeds	If we sell assets, we must use the net cash proceeds to:
	•	repay outstanding indebtedness under our credit agreement;

	•	reinvest such net proceeds in property, plant and equipment and other long-term assets used in our business; and/or
	•	to the extent such net proceeds are not so used within 360 days of our receipt thereof, offer to purchase the registered notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest to the date of purchase.
Principal Covenants	The indenture governing the registered notes will contain covenants limiting our and our restricted subsidiaries' ability to:
	•	incur additional indebtedness or issue certain preferred stock;
	•	pay dividends, redeem or repurchase our stock or subordinated debt or make other distributions;
	•	issue stock of our subsidiaries;
	•	make certain investments or acquisitions;
	•	merge, consolidate or transfer substantially all of our assets;
	•	grant liens on our assets;
	•	enter into transactions with affiliates; and
	•	transfer or sell assets.
	These covenants are subject to a number of important limitations and exceptions.
Use of Proceeds	We will not receive any cash proceeds upon completion of the exchange offer.

Risk Factors

Investing in the registered notes involves substantial risk. See the "Risk Factors" section of this prospectus for a description of certain of the risks you should consider before investing in the notes.

RISK FACTORS

Participating in the exchange offer and investing in the registered notes involves a high degree of risk. You should read and consider carefully each of the following factors, as well as the other information contained in this prospectus, before making a decision on whether to participate in the exchange offer. The risks described below may not be the only ones we face. Additional risks and uncertainties not currently known to us or those we currently deem to be immaterial may also materially and adversely affect our business operations. Any of the following risks could materially adversely affect our business, financial condition or results of operations. In such case, you may lose all or part of your original investment.

Risks Associated with the Exchange Offer

Because there is no public market for the registered notes, you may not be able to resell your registered notes.

The registered notes will be registered under the Securities Act, but will constitute a new issue of securities with no established trading market, and there can be no assurance as to:

•: the liquidity of any trading market that may develop;
•: the ability of holders to sell their registered notes; or
•: the price at which the holders would be able to sell their registered notes.

If a trading market were to develop, the registered notes might trade at higher or lower prices than their principal amount or purchase price, depending on many factors, including prevailing interest rates, the market for similar debentures and our financial performance.

We understand that the initial purchasers of the old notes presently intend to make a market in the notes. However, they are not obligated to do so, and any market-making activity with respect to the notes may be discontinued at any time without notice. In addition, any market-making activity will be subject to the limits imposed by the Securities Act and the Exchange Act, and may be limited during the exchange offer or the pendency of an applicable shelf registration statement. An active trading market may not exist for the registered notes, and any trading market that does develop may not be liquid.

In addition, any holder who tenders in the exchange offer for the purpose of participating in a distribution of the registered notes may be deemed to have received restricted securities, and if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. For a description of these requirements, see "The Exchange Offer."

Your old notes will not be accepted for exchange if you fail to follow the exchange offer procedures and, as a result, your old notes will continue to be subject to existing transfer restrictions and you may not be able to sell your old notes.

We will not accept your old notes for exchange if you do not follow the exchange offer procedures. We will issue registered notes as part of this exchange offer only after a timely receipt of your old notes, a properly completed and duly executed letter of transmittal and all other required documents. Therefore, if you wish to tender your old notes, please allow sufficient time to ensure timely delivery. If we do not receive your old notes, letter of transmittal and other required documents by the time of expiration of the exchange offer, we will not accept your old notes for exchange. We are under no duty to give notification of defects or irregularities with respect to the tenders of outstanding old notes for exchange. If there are defects or irregularities with respect to your tender of old notes, we will not accept your old notes for exchange.

If you fail to exchange your old notes, they will continue to be restricted securities and may become less liquid.

Following the exchange offer, old notes that you do not tender or that we do not accept will continue to be restricted securities. You may not offer or sell untendered old notes except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. We will issue registered notes in exchange for the old notes pursuant to the exchange offer only following the satisfaction of the procedures and conditions described elsewhere in this prospectus. These procedures and conditions include timely receipt by the exchange agent of the old notes and of a properly completed and duly executed letter of transmittal. Because we anticipate that most holders of old notes will elect to exchange their old notes, we expect that the liquidity of the market for any old notes remaining after the completion of the exchange offer will be substantially limited.

Risks Related to the Registered Notes

Our substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations on the registered notes.

As of April 1, 2005, we had approximately $170.4 million of indebtedness (including borrowings under our senior revolving credit facility and capital leases). We also have the ability to borrow up to an additional $23.2 million under our senior revolving credit facility. Subject to restrictions in the indenture governing the registered notes and our senior revolving credit facility, we may incur additional indebtedness.

Our high level of indebtedness could have important consequences to you and significant adverse effects on our business, including the following:

•: our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired;
•: we must use a substantial portion of our cash flow from operations to pay interest on the registered notes and our other indebtedness, which will reduce the funds available to us for operations and other purposes;
•: any and all of the indebtedness outstanding under our credit facility will have a prior ranking claim on substantially all of our assets and all of the indebtedness outstanding under our purchase money indebtedness, equipment financing and real estate mortgages will have a prior ranking claim on the underlying assets;
•: our ability to fund a change of control offer may be limited;
•: our high level of indebtedness could place us at a competitive disadvantage compared to our competitors that may have proportionately less debt;
•: our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be limited; and
•: our high level of indebtedness makes us more vulnerable to economic downturns and adverse developments in our business.

We expect to use cash flow from operations to pay our expenses and amounts due under outstanding indebtedness, including the registered notes. Our ability to make these payments depends on our future performance, which will be affected by financial, business, economic and other factors, many of which we cannot control. Our business may not generate sufficient cash flow from operations in the future and our anticipated growth in revenue and cash flow may not be realized, either or both of which could result in our being unable to repay indebtedness, including the registered notes, or to fund other liquidity needs. If we do not have enough money, we may be required to refinance all or part of our then-existing debt (including the registered notes), sell assets or borrow more money. We

cannot assure you that we will be able to accomplish any of these alternatives on terms acceptable to us, or at all. In addition, the terms of existing or future debt agreements, including our senior revolving credit facility and the indenture, may restrict us from adopting any of these alternatives. The failure to generate sufficient cash flow or to achieve any of these alternatives could significantly adversely affect the value of the registered notes and our ability to pay the amounts due under the registered notes.

Our senior revolving credit facility and the indenture governing the registered notes impose significant operating and financial restrictions, which may prevent us from pursuing certain business opportunities and taking certain actions.

Our senior revolving credit facility and the indenture governing the registered notes impose significant operating and financial restrictions on us. These restrictions limit or prohibit, among other things, our ability to:

•: incur additional indebtedness;
•: repay subordinated indebtedness prior to stated maturities;
•: pay dividends on or redeem or repurchase our stock or make other distributions;
•: issue capital stock;
•: make investments or acquisitions;
•: sell certain assets or merge with or into other companies;
•: restrict dividends, distributions or other payments from our subsidiaries;
•: sell stock in our subsidiaries;
•: create liens;
•: enter into certain transactions with stockholders and affiliates; and
•: otherwise conduct necessary corporate activities.

Our senior revolving credit facility also requires us to comply with customary financial covenants including, a minimum fixed charge coverage ratio (when and if the available borrowing capacity is less than $12.5 million) and a maximum annual limit on capital expenditures.

These financial covenants may become more restrictive over time.

A breach of any of these covenants or the inability to comply with the required financial ratios could result in a default under our senior revolving credit facility or the registered notes. If any such default occurs, the lenders under our senior revolving credit facility and the holders of the registered notes may elect to declare all outstanding borrowings, together with accrued interest and other amounts payable thereunder, to be immediately due and payable. The lenders under our senior revolving credit facility also have the right in these circumstances to terminate any commitments they have to provide further borrowings. In addition, following an event of default under our senior revolving credit facility, the lenders under the facility will have the right to proceed against the collateral granted to them to secure the debt. If the debt under our senior revolving credit facility or the registered notes were to be accelerated, we cannot assure you that our assets would be sufficient to repay in full the registered notes and our other debt.

The proceeds from the collateral securing the registered notes may not be sufficient to pay all amounts owed under the registered notes if an event of default occurs and your right to receive payments under the registered notes will be effectively subordinated to our senior revolving credit facility, purchase money indebtedness, capital lease obligations, secured acquired indebtedness and other secured indebtedness to the extent of the value of the assets securing that indebtedness.

No appraisal of the value of the collateral has been made in connection with this offering and the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. Consequently, we cannot assure you that liquidating the collateral securing the registered notes would produce proceeds in an amount sufficient to pay any amounts due under the registered notes after also satisfying the obligations to pay any other senior secured creditors, including the lenders under our senior revolving credit facility. Nor can we assure you that the fair market value of the collateral securing the registered notes would be sufficient to pay any amounts due under the registered notes following their acceleration.

The registered notes and guarantees will be effectively subordinated to indebtedness that may be incurred under our senior revolving credit facility, under which we have borrowing capacity of $30.0 million, any equipment financing, purchase money debt, capital lease obligations, secured acquired indebtedness and other secured indebtedness, in each case, to the extent of the value of the assets securing that indebtedness. Our senior revolving credit facility will be secured by a first priority lien on substantially all of the collateral securing the registered notes. As a result, upon any distribution to our creditors or the creditors of any subsidiary guarantors in bankruptcy, liquidation, reorganization or similar proceedings, or following acceleration of our indebtedness or an event of default under our indebtedness, our lenders under our senior revolving credit facility, our equipment financing, our purchase money indebtedness, our secured acquired indebtedness and other secured indebtedness will be entitled to be repaid in full from the proceeds of the assets securing such indebtedness, or the sale of the equipment subject to the equipment financing, before any payment is made to you from such proceeds.

The rights of the holders of the registered notes with respect to the collateral securing the registered notes will be limited pursuant to the terms of an intercreditor agreement with the lenders under our senior revolving credit facility. Under the intercreditor agreement, if our senior revolving credit facility or our obligations thereunder are outstanding, any actions that may be taken in respect of collateral, including the ability to cause the commencement of enforcement proceedings against the collateral and to control the conduct of such proceedings, and the approval of amendments to the collateral documents, will be limited and, in certain cases, only be able to be taken at the direction of the lenders under such senior revolving credit facility, and the trustee, on behalf of the holders of the registered notes, will not have the ability to control or direct such actions, even if the rights of the holders of the registered notes are or may be adversely affected. Additional releases of collateral from liens securing the registered notes are permitted under some circumstances. See "Description of the Notes—Collateral" and "Description of the Notes—Modification of the Indenture."

A court could avoid the guarantees under fraudulent conveyance laws or certain other circumstances.

If any subsidiary guarantor becomes a debtor in a case under the Bankruptcy Code or encounters other financial difficulty, then under federal or state fraudulent conveyance laws a court in the relevant jurisdiction might avoid or cancel such subsidiary guarantor's guarantee of the registered notes. The court might do so if it found that, when such subsidiary guarantor provided its guarantee, it received less than reasonably equivalent value or fair consideration for such guarantee and either:

•: was insolvent or was rendered insolvent by reason of such guarantee;
•: was engaged, or about to engage, in a business or transaction for which its assets constituted unreasonably small capital;

•: intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they matured (as all of the foregoing terms are defined in or interpreted under the fraudulent transfer or conveyance statutes); or
•: was a defendant in an action for money damages, or had a judgment for money damages docketed against it (if, in either case, after final judgment the judgment is unsatisfied).

The court might also avoid a guarantee, without regard to the above factors, if it found that the guarantor provided its guarantee with actual intent to hinder, delay or defraud its current or future creditors.

In the United States, a court likely would find that a subsidiary guarantor did not receive reasonably equivalent value or fair consideration in exchange for its guarantee if the value received by such guarantor were found to be disproportionately small when compared with its obligations under such guarantee or, put differently, it did not benefit, directly or indirectly, from the issuance of the registered notes. If a court avoided a guarantee, you would no longer have a claim against the guarantor or against any of its assets securing the guarantee. In addition, the court might direct you to repay any amounts already received from the guarantor or from the proceeds of a foreclosure on any of its assets. If the court were to avoid any guarantee, we cannot assure you that funds would be available to pay the registered notes from another subsidiary guarantor or from any other source.

Each guarantee will state that the liability of each subsidiary guarantor thereunder is limited to the maximum amount that the subsidiary guarantor can incur without risk that the guarantee will be subject to avoidance as a fraudulent conveyance. This limitation may not protect the guarantees from a fraudulent conveyance attack or, if it does, ensure that the guarantees will be in amounts sufficient, if necessary, to pay obligations under the registered notes when due.

The notes will be structurally subordinated to all obligations of our non-guarantor subsidiaries.

The subsidiary guarantors of the registered notes include only our domestic restricted subsidiaries. The registered notes will not be guaranteed by our foreign subsidiaries. As a result of this structure, the registered notes will be structurally subordinated to all indebtedness and other obligations, including trade payables, of our non-guarantor subsidiaries. The effect of this subordination is that, in the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding involving a non-guarantor subsidiary, the assets of that subsidiary cannot be used to pay you until after all other claims against that subsidiary, including trade payables, have been fully paid. In addition, holders of minority equity interests in non-guarantor subsidiaries may receive distributions prior to or pro rata with us depending on the terms of the equity interests.

The historical financial data and the pro forma financial data included in this prospectus include our non-guarantor subsidiaries. During 2004, the net sales of our non-guarantor subsidiaries (Altra and PTH, on a combined basis) were $79.3 million, representing approximately 26.1% of total sales, on a combined basis. As of December 31, 2004, the aggregate total assets (based on book value) of our non-guarantor subsidiaries were $49.0 million, representing approximately 16.7% of total assets.

We may not be able to satisfy our obligations to holders of the registered notes upon a change of control.

Upon the occurrence of a change of control, as defined in the indenture, we will be required to offer to purchase the notes at a price equal to 101% of the principal amount thereof, together with any accrued and unpaid interest and liquidated damages, if any, to the date of purchase. See "Description of the Notes—Repurchase upon Change of Control."

We cannot assure you that, if a change of control offer is made, we will have available funds sufficient to pay the change of control purchase price for any or all of the notes that might be delivered by holders of the notes seeking to accept the change of control offer. If we are required to

purchase notes pursuant to a change of control offer, we would be required to seek third-party financing to the extent we do not have available funds to meet our purchase obligations. There can be no assurance that we will be able to obtain such financing on acceptable terms to us or at all. Accordingly, none of the holders of the notes may receive the change of control purchase price for their notes. Our failure to make or consummate the change of control offer or pay the change of control purchase price when due will give the holders of the notes the rights described in "Description of the Notes—Events of Default."

In addition, the events that constitute a change of control under the indenture may also be events of default under our senior revolving credit facility. These events may permit the lenders under our senior revolving credit facility to accelerate the debt outstanding thereunder and, if such debt is not paid, to enforce security interests in our specified assets, thereby limiting our ability to raise cash to purchase the notes and reducing the practical benefit of the offer to purchase provisions to the holders of the notes.

You will face risks related to our holding company structure.

We are a holding company and conduct all of our operations through our subsidiaries. We currently have no significant operating assets other than our direct and indirect investments in our operating subsidiaries. All of our operating income is generated by our operating subsidiaries. We must rely on dividends and other advances and transfers of funds from our subsidiaries and earnings from our investments in cash and marketable securities to provide the funds necessary to meet our debt service obligations, including payment of principal and interest on the notes. Although we are the sole or majority stockholder of each of our operating subsidiaries and therefore able to control their respective declarations of dividends, applicable laws may prevent our operating subsidiaries from being able to pay such dividends. In addition, such payments may be restricted by claims against our subsidiaries by their creditors, such as suppliers, vendors, lessors and employees, and by any applicable bankruptcy, reorganization or similar laws applicable to our operating subsidiaries. The availability of funds and therefore the ability of our operating subsidiaries to pay dividends or make other payments or advances to us, will depend upon their operating results.

Our only significant assets are our investments in the capital stock and ownership interests of our operating subsidiaries, which stock and ownership interests will be pledged as collateral under our senior revolving credit facility. In the event we are unable to pay principal or interest on the notes, the ability of the holders of the notes to proceed against the capital stock or ownership interests of our operating subsidiaries would be subject to the prior satisfaction in full of all amounts owing under our senior revolving credit facility.

Risks Related to Our Business

We operate in the highly competitive mechanical power transmission industry.

We operate in highly fragmented and very competitive markets in the mechanical power transmission industry. As a result, we compete against numerous businesses. Some of our competitors have achieved substantially more market penetration in certain of the markets in which we operate, such as helical gear drives and couplings, and some of our competitors are larger and have greater financial and other resources than we do. In particular, we compete with Emerson Power Transmission Manufacturing, L.P., Ogura Industrial Corporation, Regal-Beloit Corporation and Rockwell Automation, Inc. In addition, with respect to certain of our products, we compete with divisions of our OEM customers. Competition in our business lines is based on a number of considerations, including quality, reliability, pricing, availability and design and application engineering support. Our customers increasingly demand a broad product range and we must continue to develop our expertise in order to manufacture and market these products successfully. To remain competitive, we will need to invest

regularly in manufacturing, customer service and support, marketing, sales, research and development and intellectual property protection. We may have to adjust the prices of some of our products to stay competitive. We cannot assure you that we will have sufficient resources to continue to make such investments or that we will maintain our competitive position within each of the markets we serve.

Additionally, some of our larger, more sophisticated customers are attempting to reduce the number of vendors from which they purchase in order to increase their efficiency. If we are not selected to become one of these preferred providers, we may lose market share in some of the markets in which we compete.

There is substantial and continuing pressure on major OEMs and larger distributors to reduce costs, including the cost of products purchased from outside suppliers such as us. As a result of cost pressures from our customers, our ability to compete depends in part on our ability to generate production cost savings and, in turn, find reliable, cost effective outside suppliers to source components or manufacture our products. If we are unable to generate sufficient cost savings in the future to offset price reductions, then our gross margin could be adversely affected.

Our business is impacted by general economic conditions and we serve customers in cyclical industries.

Our financial performance depends, in large part, on conditions in the markets that we serve and on the U.S. and global economies in general. Some of the markets that we serve are highly cyclical, such as the metals, mining and energy. We have experienced a downturn and a reduction in sales and margins as a result of recent recessionary conditions. While we have undertaken restructuring and cost reduction programs to mitigate the effect of these conditions, we may be unsuccessful in doing so in the future and such actions may be insufficient. The present uncertain economic environment may result in significant quarter-to-quarter variability in our performance. Any sustained weakness in demand or continued downturn or uncertainty in the economy generally would further reduce our sales and profitability.

We may have difficulty predicting future operating results due to both internal and external factors affecting our business and operations.

Our operating results may vary significantly in the future depending on a number of factors, many of which are out of our control, including:

•: the size, timing, cancellation or rescheduling of significant orders;
•: product configuration, mix, performance and quality issues;
•: market acceptance of our new products and product enhancements and new product announcements or introductions by our competitors;
•: manufacturing costs;
•: changes in the cost of raw materials;
•: changes in pricing by us or our competitors;
•: federal exchange rates related to our international operations;
•: seasonality related primarily to the turf and garden market;
•: our ability to develop, introduce and market new products and product enhancements on a timely basis;
•: our success in maintaining brand awareness and in expanding our sales and marketing programs;

•: the loss of any of our intellectual property rights or third-party infringement or misappropriation of our intellectual property rights;
•: the level of competition;
•: potential reductions in inventories held by channel partners;
•: slowing sales of the products of our channel partners;
•: levels of expenditures on research, engineering and product development;
•: changes in our business strategies;
•: personnel changes; and
•: general economic trends and other factors.

We rely on independent distributors.

In addition to our direct sales force and manufacturer sales representatives, we depend on the services of independent distributors to sell our products and provide service and aftermarket support to our customers. We support an extensive distribution network, with over 3,000 distributor locations worldwide. Rather than serving as passive conduits for delivery of product, our industrial distributors are active participants in the overall competitive dynamics in the mechanical power transmission industry. During 2004, approximately 37.2% of our net sales (Altra and PTH on a combined basis) were generated through industrial distributors. In particular, sales through our largest distributor accounted for approximately 9.0% of our net sales for 2004. Almost all of the distributors with whom we transact business offer competitive products and services to our customers. In addition, the distribution agreements we have are typically cancelable by the distributor after a short notice period. The loss of a substantial number of these distributors or an increase in the distributors' sales of our competitors' products to our customers could materially reduce our sales and profits.

We are subject to risks associated with changing technology and manufacturing techniques, which could place us at a competitive disadvantage.

The successful implementation of our business strategy requires us to continuously evolve our existing products and introduce new products to meet customers' needs in the industries we serve and want to serve. For example, motion control products offer more precise positioning and control compared to industrial clutches and brakes. If manufacturing processes are developed to make motion control products more price competitive and less complicated to operate, our customers may decrease their purchases of mechanical power transmission products.

Our products are characterized by performance and specification requirements that mandate a high degree of manufacturing and engineering expertise. If we fail to meet these requirements, our business could be at risk. We believe that our customers rigorously evaluate their suppliers on the basis of a number of factors, including:

•: product quality;
•: price competitiveness;
•: technical expertise and development capability;
•: reliability and timeliness of delivery;
•: product design capability;
•: manufacturing expertise;

•: sales support and customer service; and
•: overall management.

Our success will depend on our ability to continue to meet our customers' changing demands with respect to these criteria. We cannot assure you that we will be able to address technological advances or introduce new products that may be necessary to remain competitive within our markets. Furthermore, we cannot assure you that any of our own technological developments will produce a sustainable competitive advantage.

Our international operations are subject to uncertainties that could affect our operating results.

Our business is subject to certain risks associated with doing business internationally. Our net sales outside North America represented approximately 24.0% of our total net sales for 2004 (Altra and PTH, on a combined basis). Accordingly, our future results could be harmed by a variety of factors, including:

•: fluctuations in currency exchange rates;
•: exchange controls;
•: compliance with U.S. Department of Commerce export controls;
•: tariffs or other trade protection measures and import or export licensing requirements;
•: potentially negative consequences from changes in tax laws;
•: interest rates;
•: unexpected changes in regulatory requirements;
•: a change in foreign intellectual property law;
•: differing labor regulations;
•: requirements relating to withholding taxes on remittances and other payments by subsidiaries;
•: restrictions on our ability to own or operate subsidiaries, make investments or acquire new businesses in these jurisdictions;
•: potential political instability and the actions of foreign governments;
•: restrictions on our ability to repatriate dividends from our subsidiaries; and
•: exposure to liabilities under the Foreign Corrupt Practices Act.

As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations. However, any of these factors could adversely affect our international operations and, consequently, our operating results.

Material weaknesses in our internal controls over financial reporting have been identified which could result in a decrease in the value of our bonds.

In connection with the audit of our financial statements for 2004, management and our independent registered public accounting firm identified a material weakness in our system of internal controls. This matter is discussed in additional detail under "Management's Discussion and Analysis of Financial Condition and Results of Operations—The Sarbanes-Oxley Act of 2002 and Material Weakness in Internal Controls." In response to the foregoing, we have undertaken a rigorous review of our internal control over financial reporting, that is ongoing, in order to improve our internal controls and ensure the delivery of accurate and timely financial information. We are currently implementing a number of measures intended to meet the foregoing objectives with respect to internal controls and delivery of financial information, and we will need to make significant improvements in our internal controls on an ongoing basis to accomplish these objectives.

We cannot assure you that our ongoing review will not identify additional control deficiencies or that we will be able to implement improvements to our internal controls in a timely manner. In addition, as a result of these reviews or otherwise, we cannot assure you that we will not need to make adjustments to any current period operating results or to operating results that have been previously publicly announced or otherwise experience an adverse affect on our operating results, financial condition or business. Any of the foregoing could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements, which could cause the market price of the notes to decline.

If we are unable to complete our assessment as to the adequacy of our internal controls over financial reporting as of December 31, 2006 as required by Section 404 of the Sarbanes-Oxley Act of 2002, or if material weaknesses are identified and reported, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our bonds.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002, the Securities and Exchange Commission adopted rules requiring public companies to include in their annual reports on Form 10-K a report of management on the company's internal control over financial reporting, including management's assessment of the effectiveness of the company's internal control over financial reporting as of the company's year end. In addition, the accounting firm auditing a public company's financial statements must also attest to and report on management's assessment of the effectiveness of the company's internal control over financial reporting as well as the operating effectiveness of the company's internal controls. While we will expend significant resources in developing the necessary documentation and testing procedures, 2006 will be the first year for which we must complete the assessment and undergo the attestation process required by Section 404 and there is a risk that we may not comply with all of its requirements. If we do not timely complete our assessment or if our internal controls are not designed or operating effectively as required by Section 404, our accounting firm may either disclaim an opinion as it relates to management's assessment of the effectiveness of its internal controls or may issue a qualified opinion on the effectiveness of the company's internal controls. It is possible that material weaknesses in our internal controls could be found. If we are unable to remediate such material weaknesses arising by December 31, 2006, our accounting firm would be required to issue an adverse opinion on our internal controls. If our accounting firm disclaims an opinion as to the effectiveness of our internal controls or if they render an adverse opinion due to material weaknesses in our internal controls, then investors may lose confidence in the reliability of our financial statements, which could cause the market price of our bonds to decline.

Because we sell our products on a purchase order basis and rely on estimated forecasts of our OEM customers' needs, inaccurate forecasts could adversely affect our business.

We generally sell our products pursuant to individual purchase orders instead of long-term purchase commitments. Therefore, we rely on estimated demand forecasts, based upon input from our customers, to determine how much material to purchase and product to manufacture. Because our sales are based on purchase orders, our customers may cancel, delay or otherwise modify their purchase commitments with little or no consequence to them and with little or no notice to us. For these reasons, we generally have limited visibility regarding our customers' product needs. We cannot provide assurance as to the quantities or timing required by our customers for our products. Whether in response to changes affecting the industry or a customer's specific business pressures, any cancellation, delay or other modification in our customers' orders could significantly reduce our revenue, cause our operating results to fluctuate from period to period and make it more difficult for us to predict our revenue. In the event of a cancellation or reduction of an order, we may not have enough time to reduce operating expenses to minimize the effect of the lost revenue on our business and we may purchase too much inventory and spend more capital than expected.

The materials used to produce our products are subject to price fluctuations that could increase costs of production and adversely affect profitability.

The materials used to produce our products, especially copper and steel, are sourced on a global or regional basis and the prices of those materials are susceptible to price fluctuations due to supply and demand trends, transportation costs, government regulations and tariffs, changes in currency exchange rates, price controls, the economic climate and other unforeseen circumstances. If we are unable to pass on materials price increases to our customers, our future profitability may be materially adversely affected.

Restructuring programs initiated in 2002 and 2003 caused disruption in our business and our relationships with our customers.

Colfax Corporation, the previous owner of our business, implemented significant corporate restructurings in 2002 and 2003. These restructurings resulted in certain targeted plant closures, employee reductions and the reorganization of our sales and marketing resources. These restructurings caused disruptions in our business and in our ability to effectively manage our inventory, fulfillment capabilities and customer relationships. If we are unable to restore inventory procedures, retain significant customers or effectively deploy sales and marketing resources, our results will be less than we anticipate.

We could face potential product liability claims relating to products we manufacture or distribute.

We face a business risk of exposure to product liability claims in the event that the use of our products is alleged to have resulted in injury or other adverse effects. We currently maintain product liability insurance coverage, but we cannot assure you that we will be able to obtain such insurance on acceptable terms in the future, if at all, or that any such insurance will provide adequate coverage against potential claims. Product liability claims can be expensive to defend and can divert the attention of management and other personnel for long periods of time, regardless of the ultimate outcome. An unsuccessful product liability defense could have a material adverse effect on our business, financial condition, results of operations or prospects or our ability to make payments on the notes when due. In addition, our business depends on the strong brand reputation we have developed. In the event that this reputation is damaged, we may face difficulty in maintaining our pricing positions with respect to some of our products, which would reduce our sales and profitability.

We may be subject to work stoppages at our facilities, or our customers may be subjected to work stoppages, which could seriously impact the profitability of our business.

As of April 1, 2005, we had approximately 2,200 employees, of whom approximately 18% were employed abroad, primarily in Europe where trade union membership is common. Approximately 285 of our North American employees are also represented by labor unions. The four U.S. collective bargaining agreements to which we are a party will expire on June 6, 2005, August 10, 2007, September 20, 2007 and February 3, 2008, respectively. Two of the four collective bargaining agreements contain provisions for additional, potentially significant lump-sum severance payments to all employees covered by the agreements who are terminated as the result of a plant closing. Although we believe that our current relations with our employees are good, if our unionized workers were to engage in a strike, work stoppage or other slowdown in the future, we could experience a significant disruption of our operations. Such a disruption could interfere with our ability to deliver products on a timely basis and could have other negative effects, including decreased productivity and increased labor costs. In addition, if a greater percentage of our work force becomes unionized, our business and financial results could be materially adversely affected. Many of our direct and indirect customers have unionized work forces. Strikes, work stoppages or slowdowns experienced by these customers or their suppliers could result in slowdowns or closures of assembly plants where our products are used.

Changes in employment laws may adversely affect our business.

Various federal, state and international labor laws govern the relationship with our employees and affect operating costs. These laws include minimum wage requirements, overtime, unemployment tax rates, workers' compensation rates and citizenship requirements. Significant additional government-imposed increases in the following areas could materially affect our business, financial condition, operating results or cash flow:

•: minimum wages;
•: mandated health benefits;
•: paid leaves of absence; and
•: tax reporting.

Unplanned repairs or equipment outages could interrupt production and reduce income or cash flow.

Unplanned repairs or equipment outages, including those due to natural disasters, could result in the disruption of our manufacturing process. Any interruption in our manufacturing process would interrupt our production of products, reduce our income and cash flow and could result in a material adverse effect on our business.

We depend on the services of key executives, the loss of whom could materially harm our business.

Our senior executives are important to our success because they are instrumental in setting our strategic direction, operating our business, identifying, recruiting and training key personnel, identifying expansion opportunities and arranging necessary financing. Losing the services of any of these individuals could adversely affect our business until a suitable replacement could be found. We believe that our senior executives could not easily be replaced with executives of equal experience and capabilities. Although we have entered into severance agreements with certain of our key domestic executives, we can not prevent our key executives from terminating their employment with us. We do not maintain key person life insurance policies on any of our executives. See "Management."

We face risks associated with environmental laws.

We are subject to extensive foreign, provincial, federal, state and local laws, regulations and ordinances that:

•: regulate activities and operations that may have environmental or health and safety effects, such as discharges to air and water, and management and disposal practices for solid and hazardous wastes; and
•: impose liability for the costs of investigating and cleaning up, and damages to natural resources from, past spills, waste disposals on and off-site, or other releases of hazardous materials or regulated substances.

In particular, under applicable environmental laws, we may be responsible for the investigation and remediation of environmental conditions at currently owned or leased sites, as well as formerly owned, leased, operated or used sites. We may be subject to associated liabilities, including liabilities resulting from lawsuits brought by private litigants, relating to the operations of our facilities or the land on which our facilities are located, regardless of whether we lease or own the facility, and regardless of whether such environmental conditions were created by us or by a prior owner or tenant, or by a third-party or a neighboring facility whose operations may have affected our facility or land. This is because liability for contamination under certain environmental laws can be imposed on the current or past owners or operators of a site without regard to fault. Moreover, our operations generated hazardous wastes that are disposed of or treated at third-party owned or operated disposal sites. If those sites become contaminated, we could also be held responsible for the cost of investigating and remediating those sites. We cannot assure you that environmental conditions relating to our prior, existing or future sites or those of predecessor companies whose liabilities we may have assumed or acquired will not have a material adverse affect on our business.

We face risks associated with our post-retirement and post-employment obligations to employees.

As part of the Acquisition, we agreed to assume pension plan liabilities for active U.S. employees under the Retirement Plan for Power Transmission Employees of Colfax Corporation, the Ameridrives International Pension Fund for Hourly Employees Represented by United Steelworkers of America, Local 3199-10, and the Colfax PT Pension Plan, collectively referred to as the Prior Plans. We have established a defined benefit plan, or New Plan, mirroring the benefits provided under the Prior Plans. The New Plan accepted a spinoff of assets and liabilities from the Prior Plans, in accordance with Section 414(l) of the Internal Revenue Code, or IRC, such assets and liabilities relating to active U.S. employees as of the closing of the Acquisition. Given the funded status of the Prior Plans and the asset allocation requirements of IRC Section 414(l), liabilities under the New Plan will greatly exceed the assets that will be transferred from the Prior Plans. Pension benefit liabilities for the New Plan, on a projected benefits obligation basis (assuming the liability for vested and unvested pension benefits accrued as of a particular date), were approximately $21.5 million as of December 31, 2004 while the fair value of assets transferred from the Prior Plans were approximately $4.6 million. As the New Plan will have a considerable funding deficit, the cash funding requirements are estimated to be substantial in the first several years, and could have a material adverse effect on our financial condition. Funding requirements are $0.5 million in 2005 and are estimated to be at least $7.4 million in 2006, declining to approximately $2.2 million in 2009.

Additionally, as part of the Acquisition, we agreed to assume all pension plan liabilities related to non-U.S. employees. Pension benefit liabilities for the non-U.S. defined benefit plans, on a projected benefits obligation basis, were approximately $3.2 million as of December 31, 2004. There are no assets associated with these plans.

Also as part of the Acquisition, we agreed to assume all post-employment and post-retirement welfare benefit obligations with respect to active U.S. employees. The benefit obligation for these liabilities, which are not funded, was approximately $12.6 million as of December 31, 2004.

Our future success depends on our ability to effectively integrate acquired companies and manage our growth.

Our growth through acquisitions has placed, and will continue to place, significant demands on our management, operational and financial resources. Realization of the benefits of acquisitions often requires integration of some or all of the acquired companies' sales and marketing, distribution, manufacturing, engineering, finance and administrative organizations. The integration of the companies will demand substantial attention from senior management and the management of the acquired companies. In addition, we will continue to pursue new acquisitions, some of which could be material to our business if completed. We cannot assure you that we will be able to integrate successfully our recent acquisitions or any future acquisitions, that these acquired companies will operate profitably, or that we will realize the potential benefits from these acquisitions.

Our ability to grow may be adversely impacted by an inability to identify acquisition candidates.

A substantial portion of the growth in our business has come through acquisitions and an important part of our growth strategy is based upon future acquisitions. We may not be able to identify and successfully negotiate suitable acquisitions, obtain financing for future acquisitions on satisfactory terms or otherwise complete acquisitions in the future. If we are unable to successfully complete acquisitions, our ability to significantly grow our company will be limited.

We may not be able to protect our intellectual property rights, brands or technology effectively.

We rely on a combination of patent, trademark, domain name registration, copyright and trade secret laws in the United States and other jurisdictions, as well as license, third-party nondisclosure, employee and consultant assignment and other agreements in order to protect our proprietary technology and rights. We cannot assure you that any of our applications for protection of our intellectual property rights will be approved, that if issued, will be maintained, or that others will not infringe or challenge our intellectual property rights. We also rely on unpatented proprietary technology. It is possible that others will independently develop the same or similar technology or otherwise obtain access to our unpatented technology. In addition, in the ordinary course of our operations, we from time to time pursue potential claims relating to the protection of certain products and intellectual property rights, including with respect to some of our more profitable products. Such claims could be time consuming, expensive and divert resources. If we are unable to maintain the proprietary nature of our technologies or proprietary protection of our brands, our ability to market or be competitive with respect to some or all of our products may be affected, which could reduce our sales and profitability.

We are a newly formed company with no operating history as a stand-alone company, which may lead to risks or unanticipated expenses similar to those of a start-up company.

Prior to the Acquisition, Colfax Corporation provided PTH with a number of support services, including accounting, treasury, taxation, legal and intellectual property, insurance administration, human resource functions and environmental support. As a stand-alone company following the Acquisition, we will need to establish our own capabilities or replace such services. Although we entered into a transition services agreement pursuant to which Colfax Corporation continued to provide these services for transition periods generally ranging from one month to one year while we establish our own capabilities, we cannot assure you that we will be able to replace the services we historically received from Colfax Corporation in a timely manner or on terms and conditions we will find acceptable. We may need to pay more for the services we historically received from Colfax Corporation in the future.

If we are unable to successfully establish our own capabilities or replace such services on a basis appropriate for operation as a stand-alone company, our business and operations will be adversely affected.

Genstar Capital controls our company and its interests may conflict with yours.

Genstar Capital and its affiliates, through their majority ownership of Holdings, have the indirect power to elect our directors, to appoint members of management and to approve all actions requiring the approval of the holders of our common stock, including adopting amendments to our certificate of incorporation and approving mergers, acquisitions or sales of all or substantially all of our assets.

The interests of Genstar Capital could conflict with your interests. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of Genstar Capital as our ultimate controlling stockholder might conflict with your interests as a holder of the notes. Genstar Capital also may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in its judgment, could enhance its equity investment, even though such transactions might involve risks to you as holders of the notes.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

We make "forward-looking statements" throughout this prospectus. Whenever you read a statement that is not solely a statement of historical fact, such as when we state that we "believe," "expect," "anticipate" or "plan" that an event will occur and other similar statements, you should understand that our expectations may not be correct, although we believe they are reasonable, and that our plans may change. We do not guarantee that the transactions and events described in this prospectus will happen as described or that any positive trends noted in this prospectus will continue. The forward-looking information contained in this prospectus is generally located under the headings "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," but may be found in other locations as well. These forward-looking statements generally relate to our strategies, plans and objectives for, and potential results of, future operations and are based upon management's current plans and beliefs or current estimates of future results or trends.

Forward-looking statements regarding management's present plans or expectations for new product offerings, capital expenditures, increasing sales, cost-saving strategies and growth involve risks and uncertainties relative to return expectations, allocation of resources and changing economic or competitive conditions, which could cause actual results to differ from present plans or expectations and such differences could be material. Similarly, forward-looking statements regarding management's present expectations for operating results and cash flow involve risks and uncertainties relative to these and other factors, such as the ability to increase revenues and/or to achieve cost reductions, and other factors discussed under "Risk Factors" or elsewhere in this prospectus, which also would cause actual results to differ from present plans or expectations. Such differences could be material.

You should read this prospectus completely and with the understanding that actual future results may be materially different from what we expect. We will not update these forward-looking statements, even if our situation changes in the future.

THE EXCHANGE OFFER

Purpose and Effect

We issued the old notes on November 30, 2004, in a private placement to a limited number of qualified institutional buyers, as defined under the Securities Act, and to a limited number of persons outside the United States. In connection with this original issuance, we and the subsidiary guarantors entered into an indenture and a registration rights agreement. The registration rights agreement requires that we file a registration statement under the Securities Act with respect to the registered notes to be issued in the exchange offer and, upon the effectiveness of the registration statement, offer to you the opportunity to exchange your old notes for a like principal amount of registered notes. Except as set forth below, these registered notes will be issued without a restrictive legend and we believe, may be reoffered and resold by you without registration under the Securities Act. After we complete the exchange offer, our obligations with respect to the registration of the old notes and the registered notes will terminate, except as provided in the last paragraph of this section. Copies of the indenture relating to the notes and the registration rights agreement have been filed as exhibits to the registration statement on Form S-4 of which this prospectus forms a part.

Based on an interpretation by the staff of the SEC set forth in no-action letters issued to third parties unrelated to us, we believe that the registered notes issued to you in the exchange offer may be offered for resale, resold and otherwise transferred by you, without compliance with the registration and prospectus delivery provisions of the Securities Act, unless you are a broker-dealer that receives registered notes in exchange for old notes acquired by you as a result of market-making or other trading activities. This interpretation, however, is based on your representation to us that:

•: the registered notes to be issued to you in the exchange offer are being acquired in the ordinary course of your business;
•: you are not engaging in and do not intend to engage in a distribution of the registered notes to be issued to you in the exchange offer; and
•: you have no arrangement or understanding with any person to participate in the distribution of the registered notes to be issued to you in the exchange offer.

If you have any of the disqualifications described above or cannot make any of the representations set forth above, you may not rely on this interpretation by the staff of the SEC referred to above. Under those circumstances, you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a sale, transfer or other disposition of any notes unless you are able to utilize an applicable exemption from all those requirements. Each broker-dealer that receives registered notes for its own account in exchange for old note where such old notes were acquired by such broker-dealer as a result of market-making activities or other trading activities must acknowledge that it will deliver a prospectus in connection with any resale of those registered notes. See "Plan of Distribution."

If you will not receive freely tradeable registered notes in the exchange offer or are not eligible to participate in the exchange offer, you may elect to have your old notes registered in a "shelf" registration statement on an appropriate form pursuant to Rule 415 under the Securities Act. If we are obligated to file a shelf registration statement, we will be required to keep the shelf registration statement effective until the earlier of (a) two years from the date the securities were originally issued, (b) the date on which all the securities registered under the shelf registration statement are disposed in accordance with the shelf registration statement or (c) there ceases to be any old notes outstanding. Other than as set forth in this paragraph, you will not have the right to require us to register your old notes under the Securities Act. See "—Procedures for Tendering."

Consequences of Failure to Exchange

After we complete the exchange offer, if you have not tendered your old notes, you will not have any further registration rights, except as set forth above. Your old notes may continue to be subject to certain restrictions on transfer. Therefore, the liquidity of the market for your old notes could be adversely affected upon completion of the exchange offer if you do not participate in the exchange offer.

Terms of the Exchange Offer

Upon the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal, we will accept any and all old notes validly tendered and not withdrawn prior to the time of expiration. We will issue a principal amount of registered notes in exchange for the principal amount of old notes accepted in the exchange offer. You may tender some or all of your old notes pursuant to the exchange offer. However, old notes may be tendered only in integral multiples of $1,000 principal amount.

The form and terms of the registered notes are substantially the same as the form and terms of the old notes, except that the registered notes to be issued in the exchange offer have been registered under the Securities Act and will not bear legends restricting their transfer. The registered notes will be issued pursuant to, and entitled to the benefits of, the indenture which governs the old notes. The registered notes and old notes will be deemed a single issue of securities under the indenture.

As of the date of this prospectus, $165.0 million aggregate principal amount of old notes was outstanding. This prospectus, together with the letter of transmittal, is being sent to all registered holders and to others believed to have beneficial interests in the old notes. We intend to conduct the exchange offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the SEC promulgated under the Exchange Act.

We will be deemed to have accepted validly tendered old notes when, as, and if we have given oral or written notice of its acceptance to the exchange agent. The exchange agent will act as our agent for the tendering holders for the purpose of receiving the registered notes from us. If we do not accept any tendered old notes because of an invalid tender or the failure of any conditions to the exchange offer to be satisfied, we will return the unaccepted old notes, without expense, to the tendering holder as promptly as practicable after the time of expiration. For the conditions of the exchange offer see "—Conditions."

You will not be required to pay brokerage commissions or fees or, except as set forth below under "—Transfer Taxes," transfer taxes with respect to the exchange of your old notes in the exchange offer. We will pay all charges and expenses, other than certain applicable taxes, in connection with the exchange offer. See "—Fees and Expenses" below.

Expiration; Amendments

The exchange offer will expire at 5:00 p.m., New York City time, on, 2005, unless we determine, in our sole discretion, to extend the exchange offer, in which case it will expire at the later date and time to which it is extended. We do not intend to extend the exchange offer, although we reserve the right to do so. If we do extend the exchange offer, we will give oral or written notice of the extension to the exchange agent and give each registered holder of old notes for which the exchange offer is being made notice by means of a press release or other public announcement of any extension prior to 9:00 a.m., New York City time, on the next business day after the scheduled expiration date of the exchange offer.

We also reserve the right, in our sole discretion:

•: to delay accepting any old notes or, if any of the conditions set forth below under "—Conditions" have not been satisfied or waived, to terminate the exchange offer by giving oral or written notice of the delay or termination to the exchange agent; or
•: to amend the terms of the exchange offer in any manner by complying with Rule 14e-1(d) under the Exchange Act of the extent that rule applies.

We acknowledge and undertake to comply with the provisions of Rule 14e-1(c) under the Exchange Act, which requires us to return the old notes surrendered for exchange promptly after the termination or withdrawal of the exchange offer. We will notify you promptly of any extension, termination or amendment.

Procedures for Tendering

Book-Entry Interests

The old notes were issued as global notes in fully registered form. Beneficial interests in the global notes, held by direct or indirect participants in DTC, are shown on, and transfers of these interests are effected only through, records maintained in book-entry form by DTC with respect to its participants.

If you hold old notes in the form of book-entry interests and you wish to tender your old notes for exchange pursuant to the exchange offer, you must transmit to the exchange agent on or prior to the time of expiration either:

•: a written or facsimile copy of a properly completed and duly executed letter of transmittal, including all other documents required by that letter of transmittal, to the exchange agent at the address set forth on the cover page of the letter of transmittal; or
•: a computer-generated message transmitted by means of DTC's Automated Tender Offer Program system and received by the exchange agent and forming a part of a confirmation of book-entry transfer, in which you acknowledge and agree to be bound by the terms of the letter of transmittal.

In addition, in order to deliver old notes held in the form of book-entry interests:

•: a timely confirmation of book-entry transfer of those old notes into the exchange agent's account at DTC pursuant to the procedure for book-entry transfers described below under "—Book-Entry Transfer" must be received by the exchange agent prior to the time of expiration; or
•: you must comply with the guaranteed delivery procedures described below.

The method of delivery of old notes and the letter of transmittal and all other required documents to the exchange agent is at your election and risk. Instead of delivery by mail, we recommend that you use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure delivery to the exchange agent before the time of expiration. You should not send the letter of transmittal or old notes to us. You may request your broker, dealer, commercial bank, trust company or other nominee to effect the above transactions for you.

Certificated Old Notes

Only registered holders of certificated old notes may tender those notes in the exchange offer. If your old notes are certificated notes and you wish to tender those notes for exchange pursuant to the exchange offer, you must transmit to the exchange agent on or prior to the time of expiration, a written or facsimile copy of a properly completed and duly executed letter of transmittal, including all other

required documents, to the address set forth below under "—Exchange Agent." In addition, in order to validly tender your certificated old notes:

•: the certificates representing your old notes must be received by the exchange agent prior to the time of expiration; or
•: you must comply with the guaranteed delivery procedures described below.

Procedures Applicable to All Holders

If you tender an old note and you do not withdraw the tender prior to the time of expiration, you will have made an agreement with us in accordance with the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal.

If your old notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your old notes, you should contact the registered holder promptly and instruct the registered holder to tender on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your old notes, either make appropriate arrangements to register ownership of the old notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time.

Signatures on a letter of transmittal or a notice of withdrawal must be guaranteed by a financial institution, including most banks, savings and loan associations and brokerage houses, that is a medallion signature guarantor, each an "eligible institution," unless:

•: old notes tendered in the exchange offer are tendered either:
•: by a registered holder who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the holder's letter of transmittal; or
•: for the account of an eligible institution; and
•: the box entitled "Special Registration Instructions" on the letter of transmittal has not been completed.

If the letter of transmittal is signed by a person other than you, your old notes must be endorsed or accompanied by a properly completed bond power and signed by you as your name appears on those old notes.

If the letter of transmittal or any old notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, those persons should so indicate when signing. Unless we waive this requirement, in this instance you must submit with the letter of transmittal proper evidence satisfactory to us of its authority to act on your behalf.

We will determine, in our sole discretion, all questions regarding the validity, form, eligibility, including time of receipt, acceptance and withdrawal of tendered old notes. This determination will be final and binding. We reserve the absolute right to reject any and all old notes not properly tendered or any old notes, our acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defects, irregularities or conditions of tender as to particular old notes; provided, however, that, in the event we waive any condition of tender for any noteholder, we will waive that condition for all noteholders. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties.

You must cure any defects or irregularities in connection with tenders of your old notes within the time period we determine unless we waive that defect or irregularity. Although we intend to notify you

of defects or irregularities with respect to your tender of old notes, neither we, the exchange agent nor any other person will incur any liability for failure to give this notification. Your tender will not be deemed to have been made and your old notes will be returned to you if:

•: you improperly tender your old notes; or
•: you have not cured any defects or irregularities in your tender; and
•: we have not waived those defects, irregularities or improper tender.

Unless otherwise provided in the letter of transmittal, the exchange agent will return your old notes as soon as practicable following the expiration of the exchange offer.

In addition, we reserve the right, in our sole discretion, to:

•: purchase or make offers for, or offer registered notes for, any old notes that remain outstanding subsequent to the expiration of the exchange offer;
•: terminate the exchange offer upon the failure of any condition to the exchange offer to be satisfied; and
•: to the extent permitted by applicable law, purchase notes in the open market, in privately negotiated transactions or otherwise.

The terms of any of these purchases or offers could differ from the terms of the exchange offer. By tendering in the exchange offer, you will represent to us that, among other things:

•: you are not an "affiliate" of us, as defined in Rule 405 under the Securities Act;
•: if you are a broker-dealer, you acquired the old notes which you seek to exchange for registered notes as a result of market making or other trading activities and not directly from the issuer and you comply with the prospectus delivery requirements of the Securities Act;
•: the registered notes to be issued to you in the exchange offer are being acquired in the ordinary course of your business;
•: you are not engaging in and do not intend to engage in a distribution of the registered notes to be issued to you in the exchange offer; and
•: you do not have an arrangement or understanding with any person to participate in the distribution of the registered notes to be acquired by you in the exchange offer.

In all cases, issuance of registered notes for old notes that are accepted for exchange in the exchange offer will be made only after timely receipt by the exchange agent of certificates for your old notes or a timely book-entry confirmation of your old notes into the exchange agent's account at DTC, a properly completed and duly executed letter of transmittal and all other required documents. If any tendered old notes are not accepted for any reason set forth in the terms and conditions of the exchange offer or if old notes are submitted for a greater principal amount than you desire to exchange, the unaccepted or non-exchanged old notes, or old notes in substitution therefor, will be returned without expense to you. In addition, in the case of old notes, tendered by book-entry transfer into the exchange agent's account at DTC pursuant to the book-entry transfer procedures described below, the non-exchanged old notes will be credited to your account maintained with DTC, as promptly as practicable after the expiration or termination of the exchange offer.

Guaranteed Delivery Procedures

If you desire to tender your old notes and your old notes are not immediately available or one of the situations described in the immediately preceding paragraph occurs, you may tender if:

•: you tender through an eligible institution;
•: on or prior to the time of expiration, the exchange agent receives from an eligible institution, a written or facsimile copy of a properly completed and duly executed letter of transmittal and notice of guaranteed delivery, substantially in the form provided by us; and
•: the certificates for all certificated old notes, in proper form for transfer, or a book-entry confirmation, and all other documents required by the letter of transmittal, are received by the exchange agent within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery.

The notice of guaranteed delivery may be sent by facsimile transmission, mail or hand delivery. The notice of guaranteed delivery must set forth:

•: your name and address;
•: the amount of old notes you are tendering; and
•: a statement that your tender is being made by the notice of guaranteed delivery and that you guarantee that within three New York Stock Exchange trading days after the execution of the notice of guaranteed delivery, the eligible institution will deliver the following documents to the exchange agent:
•: the certificates for all certificated old notes being tendered, in proper form for transfer or a book-entry confirmation of tender;
•: a written or facsimile copy of the letter of transmittal, or a book-entry confirmation instead of the letter of transmittal; and
•: any other documents required by the letter of transmittal.

Book-Entry Transfer

The exchange agent will establish accounts with respect to book-entry interests at DTC for purposes of the exchange offer promptly after the date of this prospectus. You must deliver your book-entry interest by book-entry transfer to the account maintained by the exchange agent at DTC for the exchange offer. Any financial institution that is a participant in DTC's systems may make book-entry delivery of book-entry interests by causing DTC to transfer the book-entry interests into the relevant account of the exchange agent at DTC in accordance with DTC's procedures for transfer.

If you are unable to:

•: deliver a book-entry confirmation of book-entry delivery of your book-entry interests into the relevant account of the exchange agent at DTC; or
•: deliver all other documents required by the letter of transmittal to the exchange agent prior to the time of expiration;

then you must tender your book-entry interests according to the guaranteed delivery procedures discussed above.

Withdrawal Rights

You may withdraw tenders of your old notes at any time prior to the time of expiration.

For your withdrawal to be effective, the exchange agent must receive a written or facsimile transmission notice of withdrawal at its address set forth below under "—Exchange Agent" prior to the time of expiration.

The notice of withdrawal must:

•: state your name;
•: identify the specific old notes to be withdrawn, including the certificate number or numbers and the principal amount of old notes to be withdrawn;
•: be signed by you in the same manner as you signed the letter of transmittal when you tendered your old notes, including any required signature guarantees, or be accompanied by documents of transfer sufficient for the exchange agent to register the transfer of the old notes into your name; and
•: specify the name in which the old notes are to be registered, if different from yours.

We will determine all questions regarding the validity, form and eligibility, including time of receipt, of withdrawal notices. Our determination will be final and binding on all parties. Any withdrawn tenders of old notes will be deemed not to have been validly tendered for exchange for purposes of the exchange offer. Any old notes which have been tendered for exchange but which are not exchanged for any reason will be returned to you without cost as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn old notes may be retendered by following one of the procedures described under "—Procedures for Tendering" above at any time on or prior to the time of expiration.

Conditions

Notwithstanding any other provision of the exchange offer and subject to our obligations under the registration rights agreement, we will not be required to accept for exchange, or to issue registered notes in exchange for, any old notes in the exchange offer and may terminate or amend the exchange offer, if at any time before the acceptance of any old notes for exchange in the exchange offer any of the following events occur:

•: any injunction, order or decree has been issued by any court or any governmental agency that would prohibit, prevent or otherwise materially impair our ability to proceed with the exchange offer; or
•: the exchange offer violates any applicable law, regulation or interpretation of the staff of the SEC.

These conditions are for our sole benefit and we may assert them regardless of the circumstances giving rise to them, subject to applicable law. We also may waive in whole or in part at any time and from time to time any particular condition to the exchange offer in our sole discretion. If we waive a condition, we may be required to extend the expiration of the exchange offer in order to comply with applicable securities laws. Our failure at any time to exercise any of the foregoing rights will not be deemed a waiver of these rights, and these rights will be deemed ongoing rights which may be asserted at any time and from time to time (in the case of any condition involving governmental approvals necessary for the completion of the exchange offer) and at any time prior to the time of expiration (in the case of all other conditions).

In addition, we will not accept for exchange any old notes tendered, and no registered notes will be issued in exchange for any of those old notes, if at the time the old notes are tendered any stop order is threatened by the SEC or in effect with respect to the registration statement of which this

prospectus is a part or the qualification of the indenture under the Trust Indenture Act of 1939, as amended.

The exchange offer is not conditioned on any minimum principal amount of old notes being tendered for exchange.

Exchange Agent

We have appointed the Bank of New York Trust Company, N.A. as exchange agent for the exchange offer. Questions, requests for assistance and requests for additional copies of the prospectus, the letter of transmittal and other related documents should be directed to the exchange agent addressed as follows:

By Hand, Regular, Registered or Certified Mail or Overnight Courier:

The Bank of New York
Corporate Trust Operations
Reorganization Unit
Attn:
101 Barclay Street, 7 East
New York, New York 10286

By Facsimile:

212-298-1915, Attn:

For more information or confirmation by telephone please call [ ]. Originals of all documents sent by facsimile should be sent promptly by registered or certified mail, by hand or by overnight delivery service.

Fees and Expenses

We will not pay brokers, dealers or others soliciting acceptances of the exchange offer. The principal solicitation is being made by mail. Additional solicitations, however, may be made in person or by telephone by our officers and employees.

We will pay the cash expenses to be incurred in connection with the exchange offer.

Transfer Taxes

You will not be obligated to pay any transfer taxes in connection with a tender of your old notes for exchange unless you instruct us to register registered notes in the name of, or request that old notes not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder, in which event, the registered tendering holder will be responsible for the payment of any applicable transfer tax.

Accounting Treatment

We will not recognize any gain or loss for accounting purposes upon the consummation of the exchange offer. We will amortize the expense of the exchange offer and the unamortized expenses related to the issuance of the old notes over the term of the registered notes under accounting principles generally accepted in the United States of America.

USE OF PROCEEDS

The exchange offer is intended to satisfy our obligations under the registration rights agreement. We will not receive any cash proceeds from the issuance of the registered notes. In consideration for issuing the registered notes as contemplated in this prospectus, we will receive, in exchange, an equal number of old notes in like principal amount. The form and terms of the registered notes are identical in all material respects to the form and terms of the old notes, except that the registered notes will be registered under the Securities Act and will not have the same registration rights or additional interest payment provisions. The old notes surrendered in exchange for the registered notes will be retired and marked as cancelled and cannot be reissued.

CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2004. The table below should be read in conjunction with "Use of Proceeds," "Unaudited Pro Forma Financial Statements," "Selected Historical Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and notes included elsewhere in this prospectus.

		As of December 31, 2004
		(dollars in thousands)
Cash and cash equivalents		$	4,729

Debt:
Senior revolving credit facility⁽¹⁾		$	—
Senior secured notes offered hereby			165,000
Capital leases			1,174

	Total debt	$	166,174
Stockholder equity⁽²⁾			47,114

	Total capitalization	$	213,288

⁽¹⁾: Our senior revolving credit facility has $30.0 million of borrowing capacity (including $10.0 million available for letters of credit), $23.2 of which is available as of April 1, 2005.
⁽²⁾: Includes (i) $26.3 million of proceeds from the sale of Holdings capital stock, $8.8 million of Kilian capital stock that was exchanged for Holdings capital stock, and $13.7 million of subordinated notes investments in Holdings, all of which were contributed to us at the consummation of the offering of the old notes, and (ii) the financial results of our operations for the period from December 1, 2004 to December 31, 2004. For a description of transactions with our affiliates related to the Acquisition and Related Transactions, see "Certain Relationships and Related Transactions."

UNAUDITED PRO FORMA FINANCIAL STATEMENTS

The following unaudited pro forma financial information has been derived by the combination of and application of pro forma adjustments to the historical financial statements of Kilian for the periods December 28, 2003 through October 22, 2004 and October 23 through November 30, 2004; and of PTH for the period January 1 through November 30, 2004; and of Altra from inception to December 31, 2004. The unaudited pro forma statement of income for the year ended December 31, 2004 gives effect to the Acquisition and Related Transactions as if they had been consummated on January 1, 2004. We have not included an unaudited pro forma balance sheet since the balance sheet, at December 31, 2004, included in this prospectus gives effect to the Acquisition.

Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with this unaudited pro forma financial information.

The unaudited pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. The unaudited pro forma financial information does not purport to represent what the results of operations of Altra would have been had the Acquisition and Related Transactions actually occurred on January 1, 2004, nor do they purport to project the results of operations of Altra for any future period. The unaudited pro forma statement of income should be read in conjunction with the information contained in "Selected Historical Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and the related notes thereto appearing elsewhere in this registration statement.

UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2004

			Historical
			Kilian			Kilian			PTH			Altra
			(Period From December 28, 2003 Through October 22, 2004)			(Period From October 23 Through November 30, 2004)			(Period From January 1 Through November 30, 2004)			(Period From Inception December 1, Through December 31, 2004)			Pro Forma Adjustments				Pro Forma Year Ended December 31, 2004
Net sales			$	34,955		$	4,388		$	275,239		$	28,726		$	—			$	343,308
Cost of sales				27,414			3,546			210,527			24,051			(1,271	)	(1)		264,267

	Gross profit			7,541			842			64,712			4,675			1,271				79,041
Selling, general, administrative and other operating expenses				1,940			294			49,373			5,000			3,954		(2)		60,561

Operating profit (loss)				5,601			548			15,339			(325	)		(2,683	)			18,480
Other (income) expense:
	Interest expense			—			648			4,294			1,450			10,668		(3)		17,060
	Interest (income)			(175	)		—			—			—			—				(175	)
	Other (income) loss, net			—			7			(1,152	)		—			—				(1,145	)

		Total other expense (income)		(175	)		655			3,142			1,450			10,668				15,740
(Loss) income before income taxes				5,776			(107	)		12,197			(1,775	)		(13,351	)			2,740
Income tax (benefit) expense				2,139			(36	)		5,430			(248	)		(5,073	)	(4)		2,212

	Net (loss) income		$	3,637		$	(71	)	$	6,767		$	(1,527	)	$	(8,278	)		$	528

See accompanying Notes to Unaudited Pro Forma Financial Statements

NOTES TO UNAUDITED PRO FORMA STATEMENTS OF INCOME
(dollars in thousands)

(1)	Adjustments to cost of goods sold as follows:
		Additional expense required to include a full year of depreciation expense associated with the fair value adjustment to property, plant and equipment recorded in connection with the Acquisition	$	428
		Elimination of additional cost of goods sold, recognized in December 2004, as a result of the fair value adjustment to inventory recorded in connection with the Acquisition		(1,699	)

		Total pro forma adjustment	$	(1,271	)
(2)	Adjustments to selling, general, administrative and other operating expenses as follows:
		Additional expense required to include a full year of the $1.0 million management fee due, annually, to Genstar Capital	$	896
		Additional expense required to present a full year of amortization expense (based on lives ranging from 8 to 12 years) associated with intangible assets recorded in connection with the Acquisition		2,708
		Additional expense required to manage China operations, services previously provided by PTH's parent without allocating cost to PTH		600
		Additional expense required to include the full year costs of general and administrative services previously performed by PTH's parent without allocating costs to PTH		980
		Additional expense required to include the full year costs of changes to Kilian benefit plans and executive salaries		327
		Elimination of pension and OPEB expense based on obligations not assumed by Altra		(1,557	)

		Total pro forma adjustment	$	3,954
(3)	Adjustments to interest expense as follows:
		Additional expense required to present of full year of expense associated with the notes	$	13,612
		Additional minimum expense associated with unused commitments under the senior revolving credit facility and related servicing fees		153
		Additional expense required to present a full year of amortization expense (based on lives ranging from 5 to 7 years) associated with debt issuance costs incurred in connection with the notes and senior revolving credit facility		1,845
		Elimination of interest expense recorded at Kilian and PTH		(4,942	)

		Total pro forma adjustment	$	10,668
(4)	Adjustment to record additional tax benefit, calculated at an effective rate of 38% which reflects the federal, state and foreign statutory rate in effect at the beginning of 2004, resulting from the other pro forma adjustments. Historical tax expense has not been adjusted.

SELECTED HISTORICAL FINANCIAL DATA

We were formed to facilitate the Acquisition and Related Transactions. The following table contains selected historical financial data of Altra for the period from inception (December 1, 2004) to December 31, 2004 and PTH, or the Predecessor, for the period from January 31, 2004 through November 30, 2004 and for the years ended December 31, 2003, 2002 and 2001. Colfax Corporation did not maintain separate financial statements for PTH as a stand-alone business. At the time of the Acquisition, Colfax Corporation produced historical financial statements for PTH for the fiscal years ended December 31, 2001, 2002 and 2003 but was not able to provide us with audited financial statements for PTH for the fiscal year ended December 31, 2000. We do not have access to information for PTH relating to the fiscal year ended December 31, 2000. As a result, historical financial data for the fiscal year ended December 31, 2000 is not available to us and consequently we are unable to disclose selected historical financial data for PTH for the fiscal year ended December 31, 2000. The following should be read in conjunction with "Use of Proceeds," "Capitalization," "Unaudited Pro Forma Financial Statements," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and notes included elsewhere in this registration statement.

					Predecessor
		Altra (Period From Inception December 1 Through December 31, 2004)			Predecessor
					(Period From January 1 Through November 30, 2004)			2003			Year Ended December 31, 2002			2001
		(dollars in thousands)
Income Statement Data:
Net sales		$	28,726		$	275,239		$	266,765		$	253,217		$	259,761
Cost of sales			24,051			210,527			208,264			190,538			193,663

Gross profit			4,675			64,712			58,501			62,679			66,098
Selling, general and administrative expenses			4,717			45,474			49,435			48,303			50,508
Research and development expenses			283			2,952			2,673			3,103			2,518
Restructuring charge, asset impairment and transition expenses			—			947			11,085			27,825			—

Income (loss) from operations			(325	)		15,339			(4,692	)		(16,552	)		13,072
Interest expense			1,450			4,294			5,368			5,489			6,655
Other expense (income)			—			(1,152	)		465			(312	)		94

Income (loss) before income taxes, discontinued operations and cumulative effect of change in accounting principles			(1,775	)		12,197			(10,525	)		(21,729	)		6,323

Provision (benefit) for income taxes			(248	)		5,430			(1,592	)		2,455			4,794
Income (loss) from operations and disposal of discontinued operations, net of income taxes			(1,527	)		6,767			—			(700	)		(1,867	)
Cumulative effect of change in accounting principle—goodwill impairment			—			—			—			(83,412	)		—

Net income (loss)		$	(1,527	)	$	6,767		$	(8,933	)	$	(108,296	)	$	(338	)

Other Financial Data:
Depreciation and amortization		$	927		$	6,193		$	8,438		$	9,633		$	12,293
Purchases of fixed assets			289			3,489			5,294			5,911			4,374
Cash flow provided by (used in):
	Operating activities		6,629			3,156			(16,749	)		21,934			27,658
	Investing activities		(181,444	)		953			(1,573	)		(4,585	)		(3,645	)
	Financing activities		179,469			(6,154	)		15,206			(13,037	)		(23,379	)
Ratio of earnings to fixed charges⁽¹⁾⁽²⁾			—			3.6x			—			—			1.9x

	2004		Predecessor 2003
Balance Sheet Data:
Cash and cash equivalents	$	4,729	$	3,163
Property, plant and equipment, net		68,919		62,311
Total assets		293,345		178,408
Long-term debt		158,740		1,025
Total stockholder's equity/Invested capital		47,114		1,014

RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth the ratio of earnings to fixed charges for the period from inception on December 1, through December 31, 2004, the period from January 1 through November 30, 2004 and the years 2003, 2002 and 2001:

				Predecessor
		Period From Inception on December 1, Through December 31, 2004		Colfax PT (Period From January 1 Through November 30, 2004		2003		2002		2001
Ratio of earnings to fixed charges⁽¹⁾⁽²⁾		—		3.6x		—		—		1.9x

⁽¹⁾: For purposes of calculating the ratio of earnings to fixed charges, earnings represent income before income taxes, discontinued operations and cumulative effect of change in accounting principles charges. Fixed charges represent interest expense and a portion of rental expense which we believe is representative of the interest component of rental expense.
⁽²⁾: Earnings were insufficient to cover fixed charges in the period December 1 through December 31, 2004, and each of the years ended December 31, 2003 and 2002 by $1.8 million, $10.5 million and $21.7 million, respectively.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of operations of Altra Industrial Motion, Inc. should be read together with the Selected Financial Data, Unaudited Pro Forma Financial Statements and the financial statements of Altra Industrial Motion, Inc. and related notes included elsewhere in this registration statement. The following discussion includes forward-looking statements. For a discussion of important factors that could cause actual results to differ materially from the results referred to in the forward-looking statements, see "Forward-Looking Statements."

General

Altra is a leading multi-national designer, producer and marketer of a wide range of mechanical power transmission products. Our product portfolio includes industrial clutches and brakes, enclosed gear drives, open gearing, couplings, machined-race bearings and other related products which are sold across a wide variety of industries. Our products benefit from our industry leading brand names including Ameridrives, Boston Gear, Warner Electric, Formsprag Clutch, Industrial Clutch, Kilian, Marland Clutch, Nuttall Gear, Stieber and Wichita Clutch. Our products serve a wide variety of end markets including automotive, general industrial, material handling, mining, power generation, transportation and turf and garden. We primarily sell our products to OEMs such as John Deere, Carrier and General Electric and through long-standing relationships with the industry's leading industrial distributors such as Motion Industries, Applied Industrial Technologies, Kaman Industrial Technologies and W.W. Grainger.

History and the Acquisitions

Altra and PTH, its Predecessor, have designed and marketed mechanical power transmission products for over a century. Our current business began with the acquisition by Colfax Corporation of the mechanical power transmission group of Zurn Technologies, Inc. in December 1996. Colfax Corporation subsequently acquired Industrial Clutch Corp. in May 1997, Nuttall Gear Corp. in July 1997 and the Boston Gear and Delroyd Worm Gear brands in August 1997 as part of Colfax Corporation's acquisition of Imo Industries, Inc. In February 2000, Colfax Corporation acquired Warner Electric, Inc., which sold products under the Warner Electric, Formsprag Clutch, Stieber and Wichita Clutch brands. The businesses that formed PTH were operated as independent businesses within Colfax Corporation and participated in various strategic initiatives implemented by Colfax Corporation, including lean manufacturing programs.

On November 30, 2004, we acquired PTH and Kilian in the Acquisition described under "The Acquisition and Related Transactions." Although we plan to continue our focus on improved operating efficiency, the programs previously implemented by Colfax Corporation may be modified or terminated after the Acquisition. Because of such modifications or terminations, the results of operations of the Predecessor may not be fully indicative of our results of operations as a stand-alone company. See "Risk Factors—Risks Relating to Our Business—We are a newly formed company with no operating history as a stand-alone company, which may lead to risks or unanticipated expenses similar to those of a start-up company."

Recent Cost Savings and Productivity Enhancement Initiatives

Our Predecessor enacted significant cost savings programs over the last several years to reduce its overall cost structure and improve cash flows. Cost reduction programs included the consolidation of facilities, headcount reductions and reductions in overhead costs, which resulted in restructuring charges, asset impairment and transition expenses of $11.1 million and $27.8 million in the year ending December 31, 2003 and 2002, respectively. Cash outflows related to the restructuring programs were

$2.2 million in 2004, $13.9 million in 2003 and $3.3 million in 2002. The financial impact of some of the specific cost reduction programs implemented by the Predecessor is listed below:

•: In 2002, the Predecessor accrued approximately $7.1 million in restructuring charges, of which $6.7 million represented severance costs related to work force reductions of approximately 315 manufacturing and administrative employees.
•: In 2002, the Predecessor recognized a non-cash impairment charge of approximately $18.1 million relating to the reduced value of certain assets following plant closures.
•: In 2002 and 2003, the Predecessor incurred transition expenses, including relocation, training, recruiting and moving costs, directly related to implementing its restructuring activities amounting to $2.6 million and $9.1 million, respectively.
•: In 2003, the Predecessor recorded a $2.0 million loss from the sale of certain real estate associated with facilities closed as a part of its restructuring activities.

For a description of restructuring and other similar costs of the Predecessor, refer to Note 14 to the audited financial statements included elsewhere in this registration statement.

Critical Accounting Policies

The methods, estimates and judgments we use in applying our critical accounting policies have a significant impact on the results we report in our financial statements. We evaluate our estimates and judgments on an on-going basis. Our estimates are based upon historical experience and assumptions that we believe are reasonable under the circumstances. Our experience and assumptions form the basis for our judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may vary from what our management anticipates and different assumptions or estimates about the future could change our reported results.

We believe the following accounting policies are the most critical in that they are important to the financial statements and they require the most difficult, subjective or complex judgments in the preparation of the financial statements.

Revenue recognition. Sales and related cost of sales are recorded upon transfer of the title of the product, which occurs upon shipment to the customer, based on the invoice price less allowances for sales returns, cash discounts, and other deductions as required under generally accepted accounting standards. Collection is reasonably assured as determined through an evaluation of each customer's ability to pay.

Inventory. In connection with the Acquisition, we adjusted the fair value of acquired finished goods inventories to their estimated sales price less an appropriate amount representing the expected profitability from selling efforts, in accordance with SFAS No. 141, Business Combinations. The fair value adjustment reduced gross margin by approximately $1.7 million during December 2004, a similar reduction will occur in the first quarter of 2005.

We value raw materials, WIP and finished goods produced since Inception at the lower of cost or market, as determined on a first-in, first-out (FIFO) basis. In some cases, we have determined a certain portion of our inventories are excess or obsolete. In those cases, we write down the value of those inventories to their net realizable value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

Retirement benefits. Pension obligations and other post retirement benefits are actuarially determined and are affected by several assumptions, including the discount rate, assumed annual rates of return on plan assets, and per capita cost of covered health care benefits. Changes in discount rate

and differences from actual results for each assumption will affect the amounts of pension expense and other post retirement expense recognized in future periods.

Following the Acquisition, we retained the defined benefit plans for active and former employees of our subsidiaries located outside the United States and the pension and other post retirement benefit liabilities associated only with active personnel in the United States. The liabilities associated with pension and post retirement obligations were restated to their fair value in accordance with purchase accounting as prescribed by SFAS No. 141 Business Combinations, SFAS No. 87 Employers' Accounting for Pensions, and FAS 106 Employers' Accounting for Postretirement Benefits Other Than Pensions.

Intangible assets. Intangible assets of the Predecessor consisted of goodwill, which represented the excess of the purchase price paid over the fair value of the net assets acquired. In connection with the Acquisition, intangible assets were identified and recorded at their fair value, as determined by an independent valuation firm, in accordance with SFAS No. 141, Business Combinations. The Company recorded intangible assets for customer relationships, tradenames and trademarks, product technology and patents, and goodwill. Customer relationships and product technology and patents are considered finite-lived assets, with estimated lives ranging from 8 to 12 years. Goodwill and tradenames and trademarks are considered indefinite lived assets.

As discussed in Note 6 to the audited financial statements, the Predecessor adopted SFAS No. 142 Goodwill and Other Intangible Assets and recorded an after-tax impairment charge of $83.4 million during 2002. In accordance with SFAS No. 142, we will assess the fair value of our reporting units for impairment of intangible assets based upon a discounted cash flow methodology. Estimated future cash flows are based upon historical results and current market projections, discounted at a market comparable rate. If the carrying amount of the reporting unit exceeds the estimated fair value determined using the discounted cash flow calculation, goodwill impairment may be present. We would evaluate impairment losses based upon the fair value of the underlying assets and liabilities of the reporting unit, including any unrecognized intangible assets, and estimate the implied fair value of the intangible asset. An impairment loss would be recognized to the extent that a reporting unit's recorded value of the intangible asset exceeded its calculated fair value.

We are in the process of allocating our final goodwill and intangible assets, arising from the application of purchase accounting for the Predecessor and Kilian acquisitions, and have not yet allocated these assets across its business units. We evaluated our intangible assets at the Company level at December 31, 2004 and found no evidence of impairment at that date. Our analysis included consideration of the purchase price paid for the acquisitions on November 30, 2004 and the fair value of our acquired assets as determined by an independent valuation firm.

Long-lived assets. Long-lived assets are reviewed for impairment when events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable and for all assets to be disposed. Long-lived assets held for use are reviewed for impairment by comparing the carrying amount of an asset to the undiscounted future cash flows expected to be generated by the asset over its remaining useful life. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value, and is charged to results of operations at that time. Assets to be disposed of are reported at the lower of the carrying amounts or fair value less cost to sell. Our management determines fair value using discounted future cash flow analysis. Determining market values based on discounted cash flows requires our management to make significant estimates and assumptions, including long-term projections of cash flows, market conditions and appropriate discount rates.

As a result of the Acquisition, tangible fixed assets were restated to their fair value, as determined by an independent valuation firm, in accordance with SFAS No. 141, Business Combinations.

Income taxes. At the end of each quarter, management estimates the effective tax rate expected to be applicable for the full year. The estimated effective tax rate reflects the expected jurisdiction where income is earned as well as tax planning strategies. If the actual results are different from our estimates, adjustments to the effective tax rate may be required in the period in which such determination is made.

We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities. Our management regularly reviews deferred tax assets for recoverability and establishes a valuation allowance based on historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences. As a result of this review, a valuation allowance has been established against a portion of the deferred tax assets.

Non-GAAP Financial Measures

The discussion of Results of Operations included below includes certain references to financial results on a "combined basis." The combined results were prepared by adding the results of Altra from Inception to December 31, 2004 to those from the Predecessor for the 11 month period ending November 30, 2004. Management believes that this presentation provides useful information for our investors in the comparison of Predecessor trends and operating results. The combined results are not necessarily indicative of what our results of operations may have been if the Acquisition and Related Transactions had been consummated earlier, nor should they be construed as being a representation of our future results of operations.

The discussion of EBITDA (earnings before interest, income taxes, depreciation and amortization) included in the discussion of Results of Operations below is being provided because management considers EBITDA to be an important measure of financial performance. Among other things, management believes that EBITDA provides useful information for our investors because it is useful for trending, analyzing and benchmarking the performance and value of our business. Management also believes that EBITDA is useful in assessing current performance compared with the historical performance of our Predecessor because significant line items within our income statements such as depreciation, amortization and interest expense are significantly impacted by the Acquisition. Internally, EBITDA is used as a financial measure to assess the operating performance and is an important measure in our incentive compensation plans. EBITDA should not be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of our financial performance, or as an alternative to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity.

Results of Operations

		Dollars in thousands
								Predecessor
		Combined 12 Months ended December 31, 2004			From Inception (December 1, 2004) through December 31, 2004			11 Months ended November 30, 2004			Year-ended December 31, 2003			Year-ended December 31, 2002
Net sales		$	303,965		$	28,726		$	275,239		$	266,765		$	253,217
Cost of sales			234,578			24,051			210,527			208,264			190,538

	Gross profit		69,387			4,675			64,712			58,501			62,679
	Gross profit percentage		22.8	%		16.3	%		23.5	%		21.9	%		24.8	%
Selling, general and administrative expenses			50,191			4,717			45,474			49,435			48,303
Research and development expenses			3,235			283			2,952			2,673			3,103
Restructuring charge, asset impairment and transition expenses			947			—			947			11,085			27,825

Income (loss) from operations			15,014			(325	)		15,339			(4,692	)		(16,552	)
Interest expense			5,744			1,450			4,294			5,368			5,489
(Gain) on sale of assets and other non-operating (income) expense			(1,152	)		—			(1,152	)		465			(312	)

Income (loss) before income taxes, discontinued operations and cumulative effect of change in accounting principle			10,422			(1,775	)		12,197			(10,525	)		(21,729	)
Provision (benefit) for income taxes			5,182			(248	)		5,430			(1,592	)		2,455

	Income (loss) before discontinued operations and cumulative effect of change in accounting principle		5,240			(1,527	)		6,767			(8,933	)		(24,184	)
	Loss from operations and disposal of discontinued operations, net of income taxes		—			—			—			—			(700	)

(Loss) income before cumulative effect of change in accounting principle			5,240			(1,527	)		6,767			(8,933	)		(24,884	)
Cumulative effect of change in accounting principle—goodwill impairment			—			—			—			—			(83,412	)

Net (loss) income		$	5,240		$	(1,527	)	$	6,767		$	(8,933	)	$	(108,296	)

Year Ended December 31, 2004 Compared with Year Ended December 31, 2003

Net sales. On a combined basis, net sales increased $37.2 million, or 13.9%, from $266.8 million in 2003 to $304.0 million in 2004. Net sales increased primarily due to continued strength in the turf and garden market, the general domestic industrial recovery and increased activity in the transportation and mining sectors which allowed the Company to increase sales prices and recover material surcharges from customers. Combined, net sales in 2004 also include $3.2 million of sales from Kilian which is included in the amounts presented since Inception. On a constant currency basis, international sales decreased 1.7% and domestic sales increased 14.6% resulting in a combined increase of 11.6%.

Gross profit. On a combined basis, gross profit increased $10.9 million, or 18.6%, from $58.5 million (21.9% of net sales) in 2003 to $69.4 million (22.8% of net sales) in 2004. The increase

includes $0.9 million from Kilian since Inception. Approximately two-thirds of the absolute increase in gross profit is due to increased net sales as discussed above. The remaining increase in gross profit and the improvement noted in the gross profit percentage is due to cost savings resulting from restructuring activities completed in prior years.

Selling, general and administrative expenses. On a combined basis, selling, general and administrative expenses increased $0.8 million from $49.4 million in 2003 to $50.2 million in 2004. As a percentage of net sales, selling, general and administrative expenses decreased from 18.5% in 2003 to 16.5% in 2004. The change in selling, general and administrative expenses reflect the offsetting impact of increased sales commissions incurred from the increase in sales, incremental costs of approximately $1.0 million relating to corporate expenses not previously incurred by the Predecessor and cost savings resulting from restructuring activities completed in prior years. On a constant currency basis, selling, general and administrative expenses decreased by 1.0%, or $0.5 million, from $49.4 million in 2003 to $48.9 million in 2004.

Research and development expenses. Research and development expenses increased $0.5 million, or 18.5%, from $2.7 million in 2003 to $3.2 million in 2004. The increase was primarily due to the change in currency valuations.

Restructuring charge, asset impairment and transition expenses. The Predecessor recorded restructuring charge, asset impairment and transition expenses of $0.9 million in 2004 primarily as a result of relocation, training, recruiting and moving costs incurred to complete restructuring activities begun in 2002. These costs were significantly below the amounts recorded in prior years when the majority of the restructuring activities, as described in the Recent Cost Savings and Productivity Enhancement Initiatives above, were taking place.

EBITDA. To reconcile the 2004 net income to EBITDA, on a combined basis, we excluded $5.2 million provision of income taxes, $5.7 million of interest expense and $8.2 million of depreciation and amortization expenses. Our 2004 EBITDA does not take into account a $1.2 million gain on sales of assets and other non-operating expenses and $0.9 million in restructuring, asset impairment and transition expenses. Taking into account the foregoing adjustments, our resulting EBITDA increased $9.2 million, or 62.1%, from $14.8 million for the year ended December 31, 2003 to $24.0 million for the same period in 2004 due to the factors described above.

Interest expense. The Company recorded consolidated interest expense of $1.5 million during the period from Inception to December 31, 2004 primarily due to the 9% Senior Secured Notes and the amortization of related deferred financing costs. The Predecessor recorded interest expense of $4.3 million during the 11 month period ending November 30, 2004. This amount was trending below the $5.4 million recognized in 2003 largely as a result of reductions in the amount of outstanding debt.

(Gain) on sale of assets and other non-operating (income) expense. The Predecessor recorded a gain on sale of assets of $1.2 million during the 11 month period ending November 30, 2004 relating to the sale of surplus real estate. This gain was offset by other expenses primarily related to the write-off of deferred loan costs which comprised the majority of the non-operating expense recorded in 2003.

Provision for income taxes. The provision for income taxes was $5.2 million on a combined basis in 2004, versus a benefit of $1.6 million for 2003. The increase in the provision for 2004 was primarily a result of the increase in our taxable income for the year.

Predecessor Results—Year Ended December 31, 2003 Compared with Year Ended December 31, 2002

Net sales. Net sales increased $13.6 million, or 5.4%, from $253.2 million in 2002 to $266.8 million in 2003. Net sales increased primarily due to increased sales to OEM customers in the turf and garden, transportation and material handling markets and the positive impact of foreign

exchange rates, partially offset by weak demand in the general industrial market in Europe. On a constant currency basis, international sales decreased 3.8% and domestic sales increased 2.8% resulting in a combined increase of 1.2%.

Gross profit. Gross profit decreased $4.2 million, or 6.7%, from $62.7 million (24.8% of net sales) in 2002 to $58.5 million (21.9% of net sales) in 2003. The decrease was primarily due to the negative impact of our restructuring activity on productivity.

Selling, general and administrative expenses. Selling, general and administrative expenses increased $1.1 million, or 2.3%, from $48.3 million in 2002 to $49.4 million in 2003. As a percentage of net sales, selling, general and administrative expenses decreased from 19.1% in 2002 to 18.5% in 2003. On a constant currency basis, selling, general and administrative expenses decreased by 3.9%, or $1.9 million, from $49.3 million in 2002 to $47.4 million in 2003. The decrease on a constant currency basis was primarily due to cost savings realized during 2003 from the Predecessor's restructuring activities initiated in 2002.

Research and development expenses. Research and development expenses decreased $0.4 million from $3.1 million in 2002 to $2.7 million in 2003. The increase was primarily due to a reduction in efforts required as a result of the completion of the Recent Cost Savings and Productivity Enhancement Initiatives, as described above.

Restructuring charge, asset impairment and transition expenses. Restructuring charge, asset impairment and transition expenses decreased $16.7 million from $27.8 million in 2002 to $11.1 million in 2003. These costs were below the amounts recorded in prior years due to the timing of related expenditures, as described in the Recent Cost Savings and Productivity Enhancement Initiatives above.

EBITDA. To reconcile the 2003 net income to EBITDA, on a combined basis, we excluded $1.6 million benefit of income taxes, $5.4 million of interest expense and $8.4 million of depreciation and amortization expenses. Our 2003 EBITDA does not take into account a $0.5 million loss on sale of assets and other non-operating expense and $11.1 million in restructuring, asset impairment and transition expenses. Taking into account the foregoing adjustments, our resulting EBITDA decreased $6.1 million, or 29.2%, from $20.9 million for the year ended December 31, 2002 to $14.8 million for the same period in 2003 due to the factors described above.

Interest expense. Interest expense decreased $0.1 million from $5.5 million in 2002 to $5.4 million in 2003. The decrease was primarily due to lower interest rates which offset the impact from increased borrowings.

(Gain) on sale of assets and other non-operating (income) expense. Other non-operating income was $0.3 million in 2002 compared to other non-operating expense of $0.5 million in 2003. The increase in expenses was primarily due to the write-off of deferred loan costs due to debt refinancing.

Provision (benefit) for income taxes. Provision (benefit) for income taxes was a provision of $2.5 million for 2002 and a benefit of $1.6 for 2003. The increase in the benefit for income taxes was primarily due to Ameridrives and Warner Electric being converted from pass-through entities to taxable entities during 2003.

Loss from operation and disposal of discontinued operations, net of income taxes. The net loss from discontinued operations for 2002 related to the net loss of Bay City Forge, which was sold in December 2002. Bay City Forge was classified as discontinued operations during 2002.

Cumulative effect of change in accounting principle—goodwill impairment. The cumulative effect of accounting change during 2002 relates to the write-off of goodwill as a result of the adoption of SFAS No. 142, Goodwill and Other Intangible Assets.

Liquidity and Capital Resources

Historical (Predecessor) Cash Flows

Historically, PTH financed its capital and working capital requirements through a combination of cash flows from operating activities and borrowings from financial institutions and its former parent company, Colfax Corporation.

Net cash flow provided by (used in) the Predecessor's operating activities, in the 11 months ending November 30, 2004 and the years ending December 31, 2003 and 2002 was $3.2 million,
$(16.7) million and $19.9 million, respectively. The increased cash flow provided by operating activities during 2004 was due primarily to increased sales and related operating results and a reduction in cash required to complete restructuring programs. The cash use in 2003 was primarily attributable to $13.9 million of cash required by the restructuring programs, an investment in inventories to support customer requirements during transition periods caused by restructuring programs and a reduction in accounts payable that had grown during 2002.

Historically, the Predecessor's investing activity was limited to the use of cash to purchase fixed assets which ranged from $5.0 to $6.0 million. The Company operates in a mature business and as a result does not have significant ongoing capital expenditure requirements. In recent years, surplus property was also sold which provided $4.4 million during the 11 months ending November 30, 2004 and $3.7 million and $1.3 million in the year ending December 31, 2003 and 2002, respectively.

Following the Acquisition and Related Transactions

Following the Acquisition and Related Transactions, our primary source of liquidity will be cash flow from operations and borrowings under our senior revolving credit facility. We expect that ongoing requirements for debt service and capital expenditures will be funded from these sources.

We expect to make capital expenditures of approximately $5.0 million in 2005. These capital expenditures will support on-going business needs.

We incurred substantial indebtedness in connection with the Acquisition. As of December 31, 2004 we had approximately $166.2 million of total indebtedness outstanding (including capital leases) which, on an annual basis, will result in approximately $17.0 million in interest expense. Our significant debt service obligations following the Acquisition and Related Transactions could, under certain circumstances, have material consequences.

Our senior revolving credit facility provides for senior secured financing of up to $30.0 million, including $10.0 million available for letters of credit. At April 1, 2005 there were $4.2 million of outstanding borrowings and $2.7 million of outstanding letters of credit under our senior revolving credit facility.

Our ability to make scheduled payments of principal and interest, to refinance our indebtedness, including the notes, or to fund planned capital expenditures will depend on our ability to generate cash in the future. Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

Based on our current level of operations, we believe that cash flow from operations and available cash, together with available borrowings under our senior revolving credit facility will be adequate to meet our future liquidity requirements for at least the next two years. We may, however, need to refinance all or a portion of the principal amounts of the notes on or prior to maturity.

We cannot assure you that our business will generate sufficient cash flow from operations, that any revenue growth or operating improvements will be realized or that future borrowings will be available under our senior secured credit facility in an amount sufficient to enable us to service our

indebtedness, including the notes, or to fund our other liquidity needs. In addition, we cannot assure you that we will be able to refinance any of our indebtedness, including our senior revolving credit facility and the notes as they become due. Our ability to access capital in the long term will depend on the availability of capital markets and pricing on commercially reasonable terms at the time we are seeking funds. See "Risk Factors—Risks Relating to this Offering—Our substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations on the notes."

Contractual Obligations

The following table is a summary of contractual cash obligations as of December 31, 2004 (in millions):

	Payments Due by Period
	2005		2006		2007		2008		Thereafter
Management fee⁽¹⁾	$	1.0	$	1.0	$	1.0	$	1.0	$	1.0
Senior revolving credit facility⁽²⁾		—		—		—		—		—
Capital leases		0.9		0.1		0.1		—		—
Operating leases		3.5		3.1		2.0		0.8		2.3
Senior secured notes		—		—		—		—		165.0

Total contractual cash obligations	$	5.4	$	4.2	$	3.1	$	1.8	$	168.3

⁽¹⁾: We have entered into an advisory services agreement with Genstar Capital which requires the annual payment of $1.0 million for management and consulting services until the agreement is terminated per mutual agreement between Altra and Genstar Capital. See "Certain Relationships and Related Party Transactions—Genstar Capital Management Agreement."
⁽²⁾: We have up to $30.0 million of borrowing capacity, through November 2009, under our senior revolving credit facility (including $10.0 million available for use for letters of credit). There were $4.2 million of outstanding borrowings and $2.7 million of outstanding letters of credit at April 1, 2005.

Income Taxes

We are subject to taxation in multiple jurisdictions throughout the world. Our effective tax rate and tax liability will be affected by a number of factors, such as the amount of taxable income in particular jurisdictions, the tax rates in such jurisdictions, tax treaties between jurisdictions, the extent to which we transfer funds between jurisdictions and repatriate income, and changes in law. Generally, the tax liability for each legal entity is determined either (a) on a non-consolidated and non-combined basis or (b) on a consolidated and combined basis only with other eligible entities subject to tax in the same jurisdiction, in either case without regard to the taxable losses of non-consolidated and non-combined affiliated entities. As a result, we may pay income taxes to some jurisdictions even though on an overall basis we incur a net loss for the period.

We have begun a preliminary analysis of the American Jobs Creation Act that was recently passed by both the U.S. House of Representatives and Senate and signed by the President in October of this year. The Act provides a deduction that has the effect of reducing our tax rate and will be phased in over the next five years.

Seasonality

We experience seasonality in our turf and garden business, which in recent years has represented approximately 10% of our net sales. As our large OEM customers prepare for the spring season, our shipments generally start increasing in December, peak in February and March, and begin to decline in April and May. This allows our customers to have inventory in place for the peak consumer purchasing periods for turf and garden products. The June-through-November period is typically the low season for us and our customers in the turf and garden market. Seasonality is also affected by weather and the level of housing starts.

Inflation

Inflation can affect the costs of goods and services we use. The majority of the countries that are of significance to us, from either a manufacturing or sales viewpoint, have in recent years enjoyed relatively low inflation. The competitive environment in which we operate inevitably creates pressure on us to provide our customers with cost-effective products and services.

Recent Accounting Pronouncements

In December 2003, Congress passed the Medicare Prescription Drug Improvement and Modernization Act of 2003 (the Act). The Act established a prescription drug benefit under Medicare, known as Medicare Part D, and a federal subsidy to sponsors of retiree health care benefit plans that are at least actuarially equivalent to Medicare Part D. The Financial Accounting Standards Board (the "FASB") has issued Staff Position No. 106-2, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug Improvement and Modernization Acts of 2003," which requires that the effects of the federal subsidy be considered an actuarial gain and recognized in the same manner as other actuarial gains and losses. A $0.3 million gain was recognized in 2004, on a combined basis, as a result of the Act.

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an amendment of ARB No. 43, Chapter 4." SFAS No. 151, which is effective for the Company beginning January 1, 2006, SFAS No. 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) so that those items are recognized as current-period charges. This statement also requires the allocation of fixed production overhead costs based on the normal capacity of the production facilities regardless of the actual use of the facility. The Company does not believe that this statement will have any material impact on the Company's financial position or results of operations.

Effective January 1, 2003, the Predecessor adopted SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." This Statement requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. SFAS No. 146 was to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The adoption of this standard did not have a material impact on the Predecessor's consolidated financial statements.

Qualitative and Quantitative Information about Market Risk

We are exposed to various market risk factors such as fluctuating interest rates and changes in foreign currency rates. At present, we do not utilize derivative instruments to manage this risk.

Currency translation. The results of operations of our foreign subsidiaries are translated into U.S. dollars at the average exchange rates for each period concerned. The balance sheets of foreign

subsidiaries are translated into U.S. dollars at the exchange rates in effect at the end of each period. Any adjustments resulting from the translation are recorded as other comprehensive income. As of December 31, 2004, the aggregate total assets (based on book value) of foreign subsidiaries were $49.0 million, representing approximately 16.7% of our total assets (based on book value). Our foreign currency exchange rate exposure is primarily with respect to the Euro.

Currency transaction exposure. Currency transaction exposure arises where actual sales and purchases are made by a business or company in a currency other than its own functional currency. Any transactional differences at an international location are accounted for on a monthly basis.

Interest rate risk. We are subject to market exposure to changes in interest rates based on our financing activities. This exposure relates to borrowings under our senior revolving credit facility that are payable at floating rates of interest. See "Description of Certain Indebtedness."

The Sarbanes-Oxley Act of 2002 and Material Weakness in Internal Control

In connection with their audit of the Company's 2004 financial statements, the Company's independent auditors expressed concerns that as of the date of their opinion, the Company's corporate financial management organization was limited to the Chief Financial Officer with support from outside consultants, divisional resources and certain transition services from Colfax Corporation. Based upon these limited corporate resources, the independent auditors noted that the Company was unable to report financial information in a timely manner. Based upon the timely financial reporting required of a public company, the outside auditors informed the senior management and Audit Committee of the Board of Directors that they believe this is a material weakness in internal controls. The Company is actively taking steps to address this situation. However, if we are unable to remediate this material weakness in time to satisfy the internal control requirements of Section 404 of the Sarbanes-Oxley Act of 2002 as of December 31, 2006, or if other material weaknesses are identified and reported, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our bonds.

BUSINESS

Our Company

Our product portfolio includes industrial clutches and brakes, enclosed gear drives, open gearing, couplings, machined-race bearings and other related products. These products are sold directly to large OEMs, such as John Deere, Carrier and General Electric, and to leading distributors, such as Motion Industries, Applied Industrial Technologies, Kaman Industrial Technologies and W.W. Grainger. These distributors sell to the replacement parts market, or aftermarket, as well as to small and medium-size OEMs. Because many of our products have a recurring replacement cycle, we believe aftermarket sales to replace our large installed base of products have generated a significant amount of our annual revenue, strongly contributed to our margins and reduced our exposure to normal economic, market and regional business fluctuations. Our customers operate in a diverse group of industries, including automotive, general industrial, material handling, mining, power generation, transportation and turf and garden.

Industry Overview

reliability and their service and technical support capabilities to maintain attractive margins on products and gain market share.

Business Strengths

We believe the following business strengths have allowed us to develop and maintain a leading position within the mechanical power transmission industry:

Leading Brand Awareness. For 2004, a majority of our revenue was generated from products that, according to the Motion Systems Design magazine survey, are recognized as having the #1 or #2 leading position in terms of brand awareness in their respective product categories. We believe our superior brand recognition is the result of a long operating history, reputation for product quality and a focus on customer service, which improves our ability to retain existing customers, win new business and expand market share.

Strong Distribution Channels. We have long-term relationships with leading industrial power transmission distributors such as Applied Industrial Technologies, Kaman Industrial Technologies, Motion Industries and W.W. Grainger. Through these large, multi-branch distributors, and regional and independent local distributors, we sell our products through over 3,000 outlets across the world. In addition to our distributor relationships, we have over 400 direct OEM customers, including many long-standing relationships with well established companies such as Carrier, General Electric and John Deere. Our OEM relationships span a variety of industries and end markets. These customers assist in increasing brand leverage through our distributor network by generating aftermarket demand for our products.

Large Installed Base of Products with Stable, Recurring Revenue Streams. For over 75 years, our products have been used in a wide range of industrial applications, resulting in a large installed base of products. We believe our strong customer relationships and brand loyalty have enabled us to capture a high percentage of aftermarket product sales. A significant amount of our revenues have historically come from the sale of replacement products, which generate recurring revenue and help to mitigate the cyclical nature of the broader economy.

Diversified Revenue Base. Our broad product offering serves a wide range of end markets, customers and geographic regions. The markets that we serve include automotive, general industrial, material handling, mining, power generation, transportation and turf and garden. Our customers are distributed across many industries. We are not dependent on any single customer or distributor. Our largest distributor has been our customer for over 50 years and represented approximately 10.2% of our net sales for 2004. Our next largest customer represented less than 4.1% of our net sales for 2004. In addition, approximately 24.0% of our net sales for 2004 were derived outside of North America, primarily in Europe and Asia. We believe the diversity of our customers, markets and products helps to reduce our exposure to specific industries, geographies and economic cycles. In addition, as companies increasingly limit their supplier base, we believe our diversified product offering and multinational service capabilities position us to capitalize on this trend and increase market share.

Proven Operational Efficiencies. We have implemented a number of operational excellence initiatives, which we refer to as the Altra Business System, or ABS. ABS is a disciplined business system designed to instill a culture of continuous improvement into all aspects of our operations and strategic planning. We believe that our commitment to the training and involvement of our associates in the use of ABS process tools and continuous improvement methodologies has given our organization the ability to effect rapid positive change and to react to changing requirements and market conditions. We believe this has allowed us to provide high-quality, more profitable service to our customers.

Experienced Senior Management Team. Our experienced senior management team has an average of 28 years of general industrial experience. In addition, our senior management team has substantial experience in integrating acquired businesses and implementing lean manufacturing techniques.

Business Strategy

Increase Market Share in our Existing Markets:

• Leverage our Sales and Distribution Network. Due to our strength of brand, breadth of product offering and large installed base of products, we have developed strong relationships with our distribution partners. We intend to continue to leverage our relationships with our distributors to gain shelf space and sell new products. For example, in 2002 we launched a product in our clutch brake line that incorporated similar features and technology as competitive products. Due to the strength of our Warner Electric brand, we quickly captured market share and generated net sales of approximately $1.9 million for 2004. In addition, we will continue to actively pursue new OEM opportunities with innovative and cost-effective product designs and applications to help grow and protect our aftermarket revenues. This strategy capitalizes on end user brand preference for our products, generating pull-through aftermarket demand from our distribution channel. We believe this strategy also allows our distributors to achieve high profit margins, which further enhances our preferred position with them.

• Focus on Strategic Marketing. We intend to continue to build our strategic marketing organization to focus on new growth opportunities in key, fast-growing OEM and end user markets, including elevators, food processing, material handling, packaging machinery and turf and garden. Through a systematic process that leverages our core brands and products, we seek to identify attractive product niches, collect customer and market data, identify market drivers, tailor product and service solutions to specific market and customer requirements and deploy resources to gain market share and drive future sales growth. In support of our strategic marketing initiatives, we recently began to redirect our sales organization to focus on key accounts in specific markets.

• Accelerate New Product and Technology Development. In a number of our strategic markets, we have identified opportunities to expand our served market by introducing new products and by improving existing products. We intend to refocus our efforts with our integrated product management, engineering and manufacturing teams to work closely with customers to improve existing application performance, reduce overall cost of ownership and develop new products and technologies.

Capitalize on Growth and Sourcing Opportunities in the Asia-Pacific Market. We intend to leverage our five established sales offices in Australia, Hong Kong, Taiwan, Thailand and Singapore, as well as expand our manufacturing presence in Asia beyond our current plant in Shenzhen, China, to drive increased sales in the high-growth Asia-Pacific region. This region also offers excellent opportunities for low-cost country sourcing of procured material. During 2004, we sourced approximately 10% of our purchases through low-cost country sourcing, from which we experienced net cost reductions of approximately 40% for these products. In the next three years, we intend to utilize our global sourcing office in Shanghai to increase our current level of low-cost country sourcing to 20% of purchases. We believe there are also opportunities to outsource some of our production from higher cost North American and Western European locations to China.

Continue to Improve Operational and Manufacturing Efficiencies. We believe we can improve profitability through cost control, overhead rationalization, global process optimization, continued

implementation of lean manufacturing techniques and strategic pricing initiatives. In addition, we have identified opportunities to further reduce costs by continuing to outsource the production of components and finished products to lower-cost manufacturing sources outside North America and Western Europe. Our operating plan, based on manufacturing centers of excellence, provides additional opportunities to reduce costs by sharing best practices across geographies and business lines and consolidating purchasing processes. Through these and other initiatives, we have identified annualized cost savings of $9 million that we believe we can realize by the end of 2007. We also intend to increase revenue and profitability by identifying and implementing strategic transactional pricing opportunities.

Selectively Pursue Acquisition, Alliance and Partnership Opportunities. The highly fragmented industrial power transmission market is comprised of many niche participants and offers numerous opportunities for consolidation. We will continue to examine potential acquisition opportunities by utilizing a disciplined approach to the evaluation and integration of acquisitions. We plan to opportunistically seek companies that our senior management team believes will enhance our global presence, broaden our product portfolio, increase our market share and provide operational and financial benefits. As a result of acquiring and successfully integrating several companies in the past eight years, we are experienced at identifying, executing and integrating synergistic opportunities and improving the operating performance of acquired businesses. In addition, we intend to establish branding alliances and partnerships with companies that maintain a strong cost and technology position but lack the infrastructure to penetrate the North American, European or Asian markets.

Products

We produce and market a wide variety of mechanical power transmission products. Our product portfolio includes industrial clutches and brakes, enclosed gear drives, open gearing, couplings, machined-race bearings and other related products which are sold across a wide variety of industries. Our products benefit from our industry leading brand names including Ameridrives, Boston Gear, Warner Electric, Formsprag Clutch, Industrial Clutch, Kilian, Marland Clutch, Nuttall Gear, Stieber and Wichita Clutch. Our products serve a wide variety of end markets including automotive, general industrial, material handling, mining, power generation, transportation and turf and garden. We primarily sell our products to OEMs such as John Deere, Carrier and General Electric and through long-standing relationships with the industry's leading industrial distributors such as Motion Industries, Applied Industrial Technologies, Kaman Industrial Technologies and W.W. Grainger.

Our primary products include:

Products	Principal Brands	Principal Markets	Sample Applications
Clutches, Clutch Brakes	Warner Electric, Formsprag Clutch, Stieber, Wichita Clutch	Material handling, turf and garden, aerospace, marine and energy	Forklifts, elevators, lawn mowers and winches
Enclosed Gear Drives	Boston Gear, Nuttall Gear	Food processing, material handling and specialty machinery	Conveyors, industrial ovens and mixers
Open Gearing	Boston Gear	General industrial applications and specialty machinery	Printing and military
Couplings	Ameridrives	Steel, power generation and petrochemical	Strip mills and turbines
Machined-race Bearings	Kilian	General industrial applications and automotive	Sliding doors, steering columns, furniture and conveyors

Our products are moving, wearing components that over time require replacement and, as a result, give rise to an on-going aftermarket opportunity. We believe that customers demonstrate a strong preference for replacing used products with new products of the same brand, our broad installed base encourages strong demand and makes our portfolio both valuable and attractive to our distributor network.

Sales and Marketing

We sell our products in over 70 countries to over 400 direct OEM customers and over 3,000 distributor outlets through our direct sales force consisting of over 250 sales and marketing personnel and our independent sales representatives. We believe that our worldwide sales and distribution presence enables us to provide timely and responsive support and service to our customers, many of which operate internationally, and to capitalize on growth opportunities in both developed and emerging markets around the world.

We employ an integrated sales and marketing strategy concentrated on both key industries and individual product lines. We believe this dual vertical market and horizontal product approach distinguishes us in the marketplace allowing us to quickly identify trends and customer growth opportunities and deploy resources accordingly. Within our key industries, we market to OEMs, encouraging them to incorporate our products into their equipment designs, to distributors and to end users, helping to foster brand preference. With this strategy, we are able to leverage our industry experience and product breadth to sell mechanical power transmission solutions for a host of industrial applications.

Distribution

Our mechanical power transmission components are either incorporated into end products sold by OEMs or sold through industrial distributors as aftermarket products to end users and smaller OEMs. Our business is geographically diversified, with 76.0% of net sales for 2004, on a combined basis, derived from customers in North America, 19.4% from customers in Europe and 4.6% from customers in Asia and other areas. We sell to over 3,000 distributor outlets, providing us with an extensive global sales network. Rather than serving as passive conduits for delivery of product, our industrial distributors are active participants influencing product purchasing decisions in the mechanical power transmission industry. In addition, distributors play a critical role through stocking inventory of our products, which affects the accessibility of our products to aftermarket buyers.

Competition

We operate in highly fragmented and very competitive markets within the mechanical power transmission market. As a result, we compete against numerous businesses. Some of our competitors have achieved substantially more market penetration in certain of the markets in which we operate, such as helical gear drives and couplings and some of our competitors are larger and have greater financial and other resources than we do. In particular, we compete with Emerson Power Transmission Manufacturing, L.P, Ogura Industrial Corporation, Regal-Beloit Corporation and Rockwell Automation. In addition, with respect to certain of our products, we compete with divisions of our OEM customers. Competition in our business lines is based on a number of considerations including quality, reliability, pricing, availability and design and application engineer support. Our customers increasingly demand a broad product range and we must continue to develop our expertise in order to manufacture and market these products successfully. To remain competitive, we will need to invest regularly in manufacturing, customer service and support, marketing, sales, research and development and intellectual property protection. We may have to adjust prices to stay competitive. In addition, some of our larger, more sophisticated customers are attempting to reduce the number of vendors from which they purchase in order to increase their efficiency. There is substantial and continuing pressure on

major OEMs and larger distributors to reduce costs, including the cost of products purchased from outside suppliers such as us. As a result of cost pressures from our customers, our ability to compete depends in part on our ability to generate production cost savings and, in turn, find reliable, cost-effective outside component suppliers or manufacture our products.

Intellectual Property

We rely on a combination of patents, trademarks, copyright and trade secret laws in the United States and other jurisdictions, as well as employee and third party non-disclosure agreements, license arrangements and domain name registrations to protect our intellectual property. We sell our products under a number of registered and unregistered trademarks, which we believe are widely recognized in the mechanical power transmission industry. With the exception of Boston Gear and Warner Electric, we do not believe any single patent, trademark or trade name is material to our business as a whole. Any issued patents that cover our proprietary technology and any of our other intellectual property rights may not provide us with adequate protection or be commercially beneficial to us and, if applied for, may not be issued. The issuance of a patent is not conclusive as to its validity or its enforceability. Competitors may also be able to design around our patents. If we are unable to protect our patented technologies, our competitors could commercialize technologies or products which are substantially similar to ours.

With respect to proprietary know-how, we rely on trade secret laws in the United States and other jurisdictions and confidentiality agreements. Monitoring the unauthorized use of our technology is difficult and the steps we have taken may not prevent unauthorized use of our technology. The disclosure or misappropriation of our intellectual property could harm our ability to protect our rights and our competitive position.

Some of our registered and unregistered trademarks include: Ameridrives, Boston Gear, Formsprag Clutch, Industrial Clutch, Kilian, Marland Clutch, Nuttall Gear, Stieber, Warner Electric and Wichita Clutch.

Research and Development and Product Engineering

We closely integrate new product development with marketing, manufacturing and product engineering in meeting the needs of our customers. We have product engineering teams that work to enhance our existing products and develop new product applications for our growing base of customers that require custom solutions. We believe these capabilities provide a significant competitive advantage in the development of high quality industrial power transmission products. Our product engineering teams focus on:

•: lowering the cost of manufacturing our existing products;
•: redesigning existing product lines to increase their efficiency or enhance their performance; and
•: developing new product applications.

Employees

customers may be subject to work stoppages, which could seriously impact the profitability of our business."

Properties

In addition to our leased headquarters in Quincy, Massachusetts, we maintain 16 production facilities, eight of which are located in the United States, two in Canada, five in Europe and one in China. The following table lists all of our facilities, other than sales offices and distribution centers, as of December 31, 2004 indicating the location, principal use and whether the facilities are owned or leased.

Location	Owned/Leased	Principal Use
United States
South Beloit, Illinois	Owned	Production
Columbia City, Indiana	Owned	Production
Warren, Michigan	Owned	Production
Syracuse, New York	Owned	Production and Administrative
Erie, Pennsylvania	Owned	Production
Wichita Falls, Texas	Owned	Production
Quincy, Massachusetts	Leased	Corporate Headquarters
Niagara Falls, New York	Leased	Production
Charlotte, North Carolina	Leased	Production
International
Toronto, Canada	Owned	Production
Bedford, England	Owned	Production
Allones, France	Owned	Production
Saint Barthelemy, France	Owned	Production
Toronto, Canada	Leased	Production
Shenzhen, China	Leased	Production
Garching, Germany	Leased	Production
Heidelberg, Germany	Leased	Production

Suppliers and Raw Materials

We obtain raw materials, component parts and supplies from a variety of sources, generally from more than one supplier. Our principal raw materials are steel, castings and copper. Our suppliers and sources of raw materials are based in both the United States and other countries and we believe that our sources of raw materials are adequate for our needs for the foreseeable future. We do not believe the loss of any one supplier would have a material adverse effect on our business or result of operations.

Environmental and Health and Safety Matters

We are subject to a variety of federal, state, local, foreign and provincial environmental laws and regulations, including those governing the discharge of pollutants into the air or water, the management and disposal of hazardous substances and wastes and the responsibility to investigate and cleanup contaminated sites that are or were owned, leased, operated or used by us or our predecessors. Many of our operations require environmental permits and controls to prevent and limit air and water pollution. These permits contain terms and conditions that impose limitations on our manufacturing activities, production levels and associated activities and periodically may be subject to modification, renewal and revocation by issuing authorities. Fines and penalties may be imposed for non-compliance with applicable environmental laws and regulations and the failure to have or to comply with the terms

and conditions of required permits. From time to time our operations may not be in full compliance with the terms and conditions of our permits. We are also subject to the federal Occupational Health and Safety Act and similar state and foreign laws which impose requirements and standards of conduct on our operations for the health and safety of our workers. We periodically review our procedures and policies for compliance with environmental and health and safety requirements. We believe that our operations are generally in compliance with applicable environmental regulatory requirements or that any non-compliances will not result in a material liability or cost to achieve compliance. Historically, the costs of achieving and maintaining compliance with environmental and health and safety requirements have not been material.

Certain environmental laws in the United States, such as the federal Superfund law and similar state laws, impose liability for the entire cost of investigation or remediation of contaminated sites upon the current site owners, the site owners and operators at the time the contamination occurred, and upon parties who generated wastes or transported or sent those wastes to an off-site facility for treatment or disposal, regardless of whether the owner owned the site at the time of the release of the hazardous substances or the lawfulness of the original waste disposal activity. As a practical matter, however, the costs of investigation and remediation are generally allocated among the viable responsible parties on some form of equitable basis. There is or could be contamination at some of our current or formerly owned or operated facilities, primarily related to historical operations at those sites, for which we could be liable under applicable environmental laws. To the extent we believe there may be a material risk to human health, safety or the environment, we or other parties who have contractual liability for the environmental conditions at those sites are addressing, or have plans to address, environmental conditions at certain of those facilities in accordance with applicable environmental laws and regulations. Our costs or liability in connection with some of those sites cannot be predicted at this time because the potential existence of contamination has not been investigated or not enough is known about the environmental conditions or likely remedial requirements. We are, however, being indemnified, or expect to be indemnified by, Colfax Corporation, subject to certain caps or limitations on the indemnification, for certain of those environmental costs and liabilities. Accordingly, based on the indemnification and the experience with similar sites of the environmental consultants who we have hired, we do not expect such costs and liabilities to have a material adverse effect on our business, operations or earnings.

Legal Matters

We are, from time to time, party to various legal proceedings arising out of our business. These proceedings primarily involve commercial claims, product liability claims, intellectual property claims, environmental claims, personal injury claims and workers' compensation claims. We cannot predict the outcome of these lawsuits, legal proceedings and claims with certainty. Nevertheless, we believe that the outcome of any currently existing proceedings, even if determined adversely, would not have a material adverse effect on our business, financial condition and results of operations.

MANAGEMENT AND DIRECTORS

The directors and principal officers of Altra, and their positions and ages as of April 1, 2005, are as follows:

Name	Age	Position
Michael L. Hurt	59	Chief Executive Officer and Director
Carl Christenson	45	President and Chief Operating Officer
David Wall	47	Chief Financial Officer
Craig Schuele	41	Vice President of Marketing and Business Development
Gerald Ferris	55	Vice President of Sales
Timothy McGowan	48	Vice President of Human Resources
Edward L. Novotny	53	Vice President and General Manager, Boston Gear and Overrunning Clutch
Jean-Pierre L. Conte	41	Director
Richard D. Paterson	62	Director
Darren J. Gold	35	Director
Frank K. Bauchiero	70	Director
Larry McPherson	59	Director

The present principal occupations and recent employment history of each of our executive officers and directors listed above is as follows:

Michael L. Hurt has been our Chief Executive Officer and one of our directors since the Acquisition. From January 1991 to November 2003, Mr. Hurt was the President and Chief Executive Officer of TB Woods Incorporated, a manufacturer of industrial power transmission products. Prior to TB Woods, Mr. Hurt spent 23 years in a variety of management positions at the Torrington Company, a major manufacturer of bearings and a subsidiary of Ingersoll Rand. Mr. Hurt has a B.S. degree in Mechanical Engineering from Clemson University and a M.B.A. from Clemson-Furman University.

Carl Christenson has been our President and Chief Operating Officer since January 2005. From 2001 to 2005, Mr. Christenson was the President of Kaydon Bearings, a manufacturer of custom-engineered bearings and a division of Kaydon Corporation. Prior to joining Kaydon, Mr. Christenson held a number of management positions at TB Woods Incorporated, a manufacturer of industrial power transmission equipment and several positions at Torrington Company, a division of Ingersoll Rand. Mr. Christenson has a M.S. and B.S. degree in Mechanical Engineering from the University of Massachusetts and a M.B.A. from Renselaer Polytechnic.

David Wall has been our Chief Financial Officer since January 2005. From August 2000 to May 2004, Mr. Wall was the Chief Financial Officer of Berman Industries, a manufacturer and distributor of portable lighting products. From 1994 to 2000, Mr. Wall was the Chief Financial Officer of DoALL Company, a manufacturer and distributor of machine tools and industrial supplies. Mr. Wall is a Certified Public Accountant and has a B.S. degree in Accounting from the University of Illinois and a M.B.A. in Finance from the University of Chicago.

Craig Schuele has been our Vice President of Marketing and Business Development since May 2004 and Vice President of Marketing since March 2002. Prior to his current position, he was a

Director of Marketing of the Company since 1995. Mr. Schuele joined the company in 1986 and has a B.S. degree in management from Rhode Island College.

Gerald Ferris has been our Vice President of Sales since March 2002 and is responsible for Warner Electric, Boston Gear, Formsprag Clutch and Marland Clutch products in the U.S. Mr. Ferris joined the company in 1978 and since joining has held various positions. He became the Vice President of Sales for Boston Gear in 1991. Mr. Ferris holds a B.A. degree in Political Science from Stonehill College.

Timothy McGowan has been our Vice President of Human Resources since June 2003. Prior to joining the company, Mr. McGowan was Vice President, Human Resources for Bird Machine, part of Baker Hughes, Inc., an oil equipment manufacturing company. Before his tenure with Bird Machine, Mr. McGowan spent many years with Raytheon in various Human Resources positions. Mr. McGowan holds a B.A. degree in English from St. Francis College in Maine.

Edward L. Novotny has been the Vice President and General Manager, Boston Gear and Overrunning Clutch of Colfax PT since May 2000. Prior to joining the company in 1999, Mr. Novotny served in a plant management role and then as the Director of Manufacturing for Stabilus Corporation, an automotive supplier, since October 1990. Prior to Stabilus, Mr. Novotny held various plant management and production control positions with Masco Industries and Rockwell International. Mr. Novotny has a B.S. degree in Business Administration from Youngstown State University.

Jean-Pierre L. Conte was elected as one of our directors and chairman of the board in connection with the Acquisition. Mr. Conte is currently Chairman and Managing Director of Genstar Capital. Mr. Conte joined Genstar Capital in 1995. Prior to joining Genstar Capital, Mr. Conte was a principal for six years at the NTC Group, Inc., a private equity investment firm. He has served as a director, chairman of the board, and a member of the compensation committee of PRA International, Inc. since 2000, and of North American Energy Partners, Inc. since 2003. He has also served as a director and member of the compensation committee of BioSource International, Inc. since 2000, and interim chairman, then chairman, of BioSource's board of directors since 2001. Mr. Conte has also served as a director of Propex Fabrics, Inc. since December, 2004. Mr. Conte holds a B.A. from Colgate University and an M.B.A. from Harvard University.

Richard D. Paterson was elected as one of our directors in connection with the Acquisition. Since 1988, Mr. Paterson has been a Managing Director at Genstar Capital. Prior to joining Genstar Capital, Mr. Paterson was a Senior Vice President and Chief Financial Officer of Genstar Corporation, a New York Stock Exchange listed company. Mr. Paterson is a Chartered Accountant and has a Bachelor of Commerce from Concordia University.

Darren J. Gold was elected as one of our directors in connection with the Acquisition. Mr. Gold is currently a Principal of Genstar Capital. Mr. Gold joined Genstar Capital in 2000. Prior to joining Genstar Capital, Mr. Gold was an engagement manager with McKinsey & Company. Mr. Gold has a B.A. in Political Science and History from the University of California, Los Angeles and a J.D. from the University of Michigan.

Frank Bauchiero was elected as one of our directors in connection with the Acquisition. Mr. Bauchiero serves on the Strategic Advisory Committee of Genstar Capital. Prior to joining Genstar Capital, Mr. Bauchiero was President and Chief Operating Officer of Walbro Corporation, a manufacturer of fuel storage and delivery systems for the automotive industry and President of Dana Corporation's North American Industrial Operations.

Larry McPherson was elected as one of our directors in January 2005. Prior to joining our board, Mr. McPherson was a Director of NSK Ltd. from 1997 until his retirement in 2003 and served as Chairman and CEO of NSK Europe from January 2002 to December 2004. In total he was employed by NSK Ltd. for twenty-one years and was Chairman and CEO of NSK Americas for the six years prior

to his European assignment. Mr. McPherson earned his MBA from Georgia State and his undergraduate degree in Electrical Engineering from Clemson University. Presently he continues to serve as an advisor to the Board of Director's of NSK Ltd. as well as a board member of a privately owned printing company.

Committees of the Board of Directors

Our board of directors has established an audit committee and a compensation committee for the Company. The members of the audit committee are Darren J. Gold, Richard D. Paterson and Larry McPherson. The members of the compensation committee are Darren J. Gold, Richard D. Paterson and Frank K. Bauchiero. The audit committee recommends the annual appointment and reviews independence of auditors for the Company and reviews the scope of audit and non-audit assignments and related fees, the results of the annual audit, accounting principles used in financial reporting, internal auditing procedures, the adequacy of our internal control procedures, related party transactions, and investigations into matters related to audit functions. The compensation committee reviews and approves the compensation and benefits for our senior employees and directors, authorizes and ratifies equity and other incentive arrangements, and authorizes employment and related agreements. From time to time, our boards of directors may contemplate establishing other committees.

Executive Compensation

The following table sets forth all cash compensation earned in the previous three years by our Chief Executive Officer and each of our other four most highly compensated executive officers during the past year (the "Named Executive Officers"). The compensation arrangements for each of these officers that are currently in effect are described under the caption "Employment Arrangements and Change in Control Arrangements" below.

SUMMARY COMPENSATION

		Annual compensation				Long-term compensation
						Awards		Payouts
Name and principal position	Year	Salary ($)	Bonus ($)	Other annual compensation⁽¹⁾ ($)		Restricted stock award(s)⁽²⁾ ($)	Securities underlying options/ SARs (#)	LTIP payouts ($)	All other compensation⁽³⁾ ($)
Michael L. Hurt⁽⁴⁾ Chief Executive Officer and Director	2004 2003 2002	43,301 — —	— — —	32,202	⁽⁵⁾	18,146 — —	— — —	— — —	— — —
Charles W. Nims⁽⁶⁾ Former President	2004 2003 2002	261,144 260,188 243,600	113,889 54,554 90,827	— — —		— — —	— — —	— — —	191,250 — —
Carl Christenson⁽⁷⁾ President and Chief Operating Officer	2004 2003 2002	— — —	— — —	— — —		— — —	— — —	— — —	— — —
David Wall⁽⁸⁾ Chief Financial Officer	2004 2003 2002	— — —	— — —	— — —		— — —	— — —	— — —	— — —
Matthew F. Taylor⁽⁹⁾ Former Vice President and General Manager, Warner Electric	2004 2003 2002	179,025 77,083 —	67,036 25,520 —	28,865 — —	⁽¹⁰⁾	— — —	— — —	— — —	134,250 — —
Edward L. Novotny Vice President and General Manager, Boston Gear and Overrunning Clutch	2004 2003 2002	178,954 174,930 168,500	77,764 24,980 33,159	— — —		— — —	— — —	— — —	134,250 — —
Gerald Ferris Vice President of Sales	2004 2003 2002	169,388 164,401 142,150	96,659 47,074 24,235	— — —		— — —	— — —	— — —	124,125 — —
Craig Schuele Vice President of Marketing and Business Development	2004 2003 2002	154,103 145,000 121,667	59,360 26,390 22,875	— — —		— — —	— — —	— — —	120,000 — —

⁽¹⁾: Excludes customary medical and dental benefits and 401(k) contributions.
⁽²⁾: Value at time of grant. The aggregate restricted stock holdings of Mr. Hurt at the end of 2004 were 292,671 shares with a value of $18,146. Restricted stock grants vest in five equal annual installments and include the right to receive dividends on such stock when declared by the board.
⁽³⁾: Reflects success bonuses paid in December 2004 by Colfax Corporation to certain former employees of Colfax Corporation upon the successful completion of the Acquisition.
⁽⁴⁾: Mr. Hurt's employment with the Company began in November of 2004. Mr. Hurt's annualized salary for 2005 will be $350,000.
⁽⁵⁾: Mr. Hurt was reimbursed $32,202 for the payment of taxes.
⁽⁶⁾: Mr. Nims' employment with the Company ended in January 2005.
⁽⁷⁾: Mr. Christenson was hired in January 2005 and his annualized salary for 2005 will be $257,500.
⁽⁸⁾: Mr. Wall was hired in January 2005 and his annualized salary for 2005 will be $215,000.
⁽⁹⁾: Mr. Taylor was hired in June 2003. Mr. Taylor's employment with the Company ended in February 2005.
⁽¹⁰⁾: Mr. Taylor was reimbursed $28,865 in 2004 for costs related to his relocation.

Equity Incentive Plan

In connection with the Acquisition, Altra Holdings, Inc., our parent, adopted an equity incentive plan that permits the grant of restricted stock, stock units, stock appreciation rights, cash, non-qualified stock options and incentive stock options to purchase shares of common stock of Holdings. The maximum number of shares of common stock, par value $0.001, of Holdings that may be issued under the terms of the equity incentive plan is 4,000,000. The maximum number of shares that may be subject to "incentive stock options" (within the meaning of Section 422 of the Internal Revenue Code) is 3,500,000 shares. Plan participants are individually subject to a maximum number of shares with respect to which awards may be granted in any calendar year during the term of the equity incentive plan. The board of directors of Holdings or a committee appointed by the board of directors will administer the equity incentive plan and will have discretion to establish the specific terms and conditions for each award. Our employees, consultants and directors will be eligible to receive awards under the Holdings equity incentive plan. Restricted stock, stock units and cash awards may constitute performance-based awards in accordance with Section 162(m) of the Internal Revenue Code at the discretion of the committee. Generally, any grant of restricted stock under our plan will be subject to vesting requirements. Restricted stock granted under our plan will vest in five equal annual installments. A grantee of restricted stock will obtain a 100% vested interest in a particular grant of restricted stock if such employee is continuously employed by us for five years after the date of grant. The committee may provide that any time prior to a change in control, any outstanding stock options, stock appreciation rights, stock units and unvested cash awards shall immediately vest and become exercisable and any restriction on restricted stock awards or stock units shall immediately lapse. Upon a participant's termination of employment (other than for cause), unless the board or committee provides otherwise: (i) any outstanding stock options or stock appreciation rights may be exercised 90 days after termination, to the extent vested, (ii) unvested restricted stock awards and stock units shall expire and (iii) cash awards and performance-based awards shall be forfeited.

Pension

Gerald Ferris and Craig Schuele previously participated in the Colfax PT Pension Plan, however on December 31, 1998 Mr. Ferris and Mr. Schuele's participation in and benefits accrued under such plan were frozen. Under the provisions of the plan, upon reaching the normal retirement age of sixty-five, Messrs. Ferris and Schuele will receive annual payments of approximately $38,700 and $10,800 respectively. As part of the Acquisition, we were obligated to assume certain liabilities of the Colfax PT Pension Plan, including such future payments to Messrs. Ferris and Schuele, and have established a new plan, the Altra Industrial Motion, Inc. Retirement Plan, providing substantially similar benefits as provided under the Colfax PT Pension Plan. See "Risk Factors—Risks Relating to Our Business—We face risks associated with our post-retirement and post-employment obligations to employees."

Director Compensation

All members of our board of directors are reimbursed for their usual and customary expenses incurred in connection with attending all board and other committee meetings. Independent directors, Frank Bauchiero and Larry McPherson, receive director fees of $40,000 per year. In January of 2005, each of the independent directors was also granted 68,250 shares of restricted common stock, which stock is subject to vesting over a period of five years.

Severance Agreements

We assumed severance agreements with the following named executive officers upon the consummation of the Acquisition:

•: Charles W. Nims
•: Matthew F. Taylor
•: Craig Schuele
•: Gerald Ferris
•: Timothy McGowan
•: Edward L. Novotny

Each of the severance agreements provide that, subject to the executive's execution of a general release of claims and the executive's compliance with certain other restrictive covenants, if the executive is terminated during the first year of employment after the Acquisition by us without "cause" or by the executive for "good reason" (each as defined in the severance agreements), we will pay the executive a severance benefit equal to the executive's annual base salary as of the closing date for a specified amount of time ranging from nine months to 12 months. If an executive timely elects continuation coverage under our health care and dental plans, subject to the executive's continued co-payment of the applicable premiums, we will continue to pay our share of the health care and dental premiums during the period of salary continuation. Continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, will commence after the period of salary continuation. Any severance benefit will cease upon the executive's obtaining other full-time employment at a rate of pay equal to or greater than 75% of the executive's base salary at the time of termination of employment.

Option/SAR Grants in Last Fiscal Year

There were no option/SAR grants in 2004.

Employment Arrangements and Change in Control Arrangements

Executive Employment Agreements. Three of our senior executives, Michael Hurt, David Wall and Carl Christenson have entered into employment agreements with Altra. Mr. Hurt's agreement has a three-year term and Messrs. Wall and Christenson's agreements have five-year terms and contain usual and customary restrictive covenants, including 12 month non-competition provisions and non-solicitation/no hire of employees or customers provisions, non-disclosure of proprietary information provisions and non-disparagement provisions. In the event of a termination without "cause" or departure for "good reason," the terminated senior executives are entitled to severance equal to 12 months salary plus an amount equal to their pro-rated bonus for the year of termination.

Stockholders Agreement. Under Amended and Restated Stockholders Agreement, Altra Holdings has the right to purchase for fair market value any management stockholder's management stock upon termination of such management stockholder's employment for any reason; provided that, if such employee is terminated for "cause", Altra Holdings may repurchase such shares at the lower of fair market value and cost. In the case of Altra Holdings' common stock, fair market value shall be determined in good faith by the Board of Directors of Altra Holdings (with a discount for lack of marketability or minority interest). In the case of the Altra Holdings' preferred stock, fair market value shall be the greater of (a) $1.00 per share (as adjusted for stock splits, dividends and the like) and (b) the fair value as determined in good faith by the Board of Directors of Altra Holdings, on the basis of a sale to a willing, unaffiliated buyer in an arm's length transaction.

Restricted Stock Agreements. In general Altra Holdings' restricted stock agreements provide that Altra Holdings has the right to repurchase a grantee's vested restricted stock at fair market value upon termination of such grantee's employment for any reason; provided that, if such employee is terminated for "cause", Altra Holdings may repurchase such shares at the lower of fair market value and cost. Fair market value shall be determined in good faith by the Board of Directors of Altra Holdings (with a discount for lack of marketability or minority interest). In addition, should Genstar Capital determine to sell any securities of Altra Holdings that results in a change of control, then upon Genstar Capital's request the grantee shall sell to the proposed purchaser a similar percentage of such grantee's restricted stock in Altra Holdings.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

All of our issued and outstanding common stock is owned by our parent, Altra Holdings. As of April 30, 2005, affiliates of Genstar Capital owned approximately 66.8% of the outstanding capital stock of Altra Holdings while the majority of the remainder is owned by Caisse de dépôt et placement du Québec, or CDPQ, and members of our senior management.

The following table sets forth information with respect to the beneficial ownership of the capital stock of Altra Holdings as of April 30, 2005:

•: each person known by us to own beneficially more than 5% of the capital stock;
•: each of the directors of Altra Holdings;
•: each of our named executive officers; and
•: all of the directors and our executive officers as a group.

The amounts and percentages of shares beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial ownership of securities. Under SEC rules, a person is deemed to be a "beneficial" owner of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are deemed to be outstanding for purposes of computing any other person's percentage. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest.

Except as otherwise indicated in these footnotes, each of the beneficial owners listed has, to our knowledge, sole voting and investment power with respect to the shares of capital stock.

Beneficial Owner	Number of Shares	Percentage of Class
Genstar Capital Partners III, L.P.⁽¹⁾	24,791,611	64.5	%
Stargen III, L.P.⁽²⁾	893,389	2.3	%
Caisse de dépôt et placement du Québec⁽³⁾	7,000,000	18.2	%
Michael L. Hurt	1,475,000	3.8	%
Charles W. Nims	—	—
Carl Christenson	1,080,000	2.8	%
David Wall	390,000	1.0	%
Craig Schuele	245,000	*
Gerald Ferris	245,000	*
Matthew Taylor	—	—
Edward L. Novotny	280,000	*
Jean-Pierre L. Conte⁽¹⁾	24,791,611	64.5	%
Richard D. Paterson⁽¹⁾	24,791,611	64.5	%
Darren J. Gold⁽⁴⁾	—	—
Frank Bauchiero⁽⁴⁾	818,250	2.2	%
Larry McPherson	318,250	*
All directors and executive officers as a group⁽¹⁾⁽²⁾	31,315,000	81.5	%

*: Less than one percent (1%).
⁽¹⁾: Genstar Capital Partners III, L.P., a Delaware limited partnership ("Genstar III"), owns 64.5% of the outstanding capital stock of Altra Holdings. Genstar Capital exercises investment discretion and control over the shares held by Genstar III. Jean-Pierre L. Conte, the chairman and a

managing director of Genstar Capital, and Richard D. Paterson, a managing director of Genstar Capital, may be deemed to share beneficial ownership of the shares shown as beneficially owned by Genstar III. Each of Mr. Conte and Mr. Paterson disclaims such beneficial ownership except to the extent of his pecuniary interest therein. The address of Genstar III is Four Embarcadero Center, Suite 1900, San Francisco, California 94111.

⁽²⁾: Stargen III, L.P., a Delaware limited partnership, owns 2.3% of the outstanding capital stock of Altra Holdings. Genstar Capital exercises investment discretion and control over the shares held by Stargen III, L.P. The address of Stargen III, L.P. is Four Embarcadero Center, Suite 1900, San Francisco, California 94111.
⁽³⁾: CDPQ is a limited partner of the Genstar Fund and its address is 1000 place Jean-Paul-Riopelle, Montreal, Québec.
⁽⁴⁾: Includes 750,000 shares of stock held by Frank Bauchiero MKC Worldwide. Mr. Bauchiero is a Strategic Advisor, and Mr. Gold is a Vice President, of Genstar III, and do not directly or indirectly have or share voting or investment power or have or share the ability to influence voting or investment power over the shares shown as beneficially owned by Genstar III.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Equity Investments

In connection with the Acquisition and Related Transactions, Genstar Capital Partners III, L.P. and Stargen III, L.P. (together, the "Genstar Funds"), CDPQ and certain members of our management purchased approximately 26.3 million shares of Altra Holdings preferred stock for approximately $26.3 million. The shares of Altra Holdings preferred stock are:

•: not redeemable;
•: convertible into common stock at the election of the holders of preferred stock and automatically upon certain enumerated events;
•: entitled to noncumulative preferential annual dividend payments of $0.08 per share when, as and if declared by the board of directors of Altra Holdings;
•: in the event of any liquidation, dissolution, winding up or sale of Altra Holdings, entitled to a preferential distribution of $1.00 per share (plus any declared but unpaid dividends);
•: entitled to protective class voting rights, including the right to veto sales or mergers of Altra Holdings, to prevent amendments to its certificate of incorporation and to prohibit future sales of its capital stock; and
•: entitled to anti-dilution protections.

In addition, the Genstar Funds and certain members of management acquired an additional 8.8 million shares of Altra Holdings preferred stock by exchanging Kilian preferred stock of equivalent value. All of the cash and Kilian preferred stock received by Altra Holdings from such sales of its preferred stock were contributed to us, and the cash portion thereof provided a portion of the funds necessary to consummate the Acquisition.

The Genstar Funds own 66.8% of the outstanding capital stock of, and control, our parent company, Altra Holdings.

Caisse de dépôt et placement du Québec, a limited partner of Genstar Capital Partners III, L.P. owns 18.2% of the outstanding capital stock of Altra Holdings.

CDPQ Subordinated Notes Investment

In connection with the Acquisition and Related Transactions, CDPQ entered into a note purchase agreement with Altra Holdings, pursuant to which CDPQ purchased $14.0 million of subordinated notes of Altra Holdings, to provide a portion of the funds necessary to consummate the Acquisition. The subordinated notes:

•: accrue payment-in-kind interest at an annual rate of 17%, provided that Altra Holdings may in its sole discretion pay such interest in whole or in part in cash to the extent allowed under the terms of the indenture governing the notes;
•: mature on November 30, 2019;
•: are redeemable at the option of Altra Holdings prior to maturity at specified prepayment premiums; and
•: are redeemable at the option of the holder at 101% of the principal amount with accrued interest in the event of a change of control of Altra Holdings or any of its material subsidiaries.

Stockholders Agreements

Altra Holdings and all of its stockholders have entered into an amended and restated stockholders agreement that:

•: imposes restrictions on their transfer of Altra Holdings shares;
•: grants the parties certain rights of first refusal and co-sale rights with respect to sales of shares by the other parties;
•: grants the Genstar Funds the right to require the other parties to participate pro rata in any sale of shares by the Genstar Funds; and
•: provides for the Genstar Funds to designate five directors.

The parties have also entered into a registration rights agreement providing for the registration of Altra Holdings' common stock, owned by them, with the SEC.

Genstar Capital Management Agreement

In connection with the Acquisition, we and our parent, Altra Holdings, entered into an advisory services agreement with Genstar Capital which we refer to herein as the Management Agreement, for management, consulting and financial advisory services and oversight to be provided to us and our subsidiaries. The Management Agreement provides for the payment to Genstar Capital of an annual consulting fee of $1.0 million for management and consulting services, and reimbursement of out-of pocket expenses. Pursuant to the Management Agreement, Genstar Capital received a one-time transaction fee of $4.0 million, plus reimbursement of $0.4 million of expenses, upon the consummation of the Acquisition for advisory services it provided in connection with the Acquisition. Genstar Capital will be entitled to receive additional compensation of 2.0% of the aggregate consideration relating to any acquisitions or dispositions completed by the Company. The agreement also provides for indemnification of Genstar Capital against liabilities and expenses arising out of Genstar Capital's performance of services under the agreement. The agreement terminates when Altra Holdings and Genstar Capital mutually agree to terminate the agreement.

Severance Agreements

Upon consummation of the Acquisition, we assumed severance agreements with certain of our named executive officers as described in "Management—Severance Agreements."

Employment Agreements

Certain of our named executive officers have entered into employment agreements with the Company, as described in "Management—Employment Arrangements and Change of Control Arrangements—Executive Employment Agreements."

Restricted Stock Agreements

Certain of our named executive officer have been granted restricted stock of Altra Holdings, as described in "Management—Employment Arrangements and Change of Control Arrangements—Restricted Stock Agreements."

DESCRIPTION OF CERTAIN INDEBTEDNESS

The following summary of certain provisions of the instruments evidencing our material indebtedness does not purport to be complete and is subject to and qualified in its entirety by reference to, all of the provisions of the corresponding agreements, including the definitions of certain terms therein that are not otherwise defined in this prospectus.

Senior Revolving Credit Facility

We summarize below the principal terms of the agreements that govern our senior revolving credit facility. This summary is not a complete description of all of the terms of the agreements.

General. In connection with the offering of the old notes, we and all of our U.S. domestic subsidiaries (the "Borrowers") entered into a senior revolving credit facility with the lenders signatory thereto and Wells Fargo Foothill, Inc., as the arranger and administrative agent. The senior revolving credit facility is in an aggregate amount of up to $30.0 million. Up to $10.0 million of the revolving credit facility is available in the form of letters of credit and amounts repaid under the revolving credit facility may be reborrowed (subject to satisfaction of the applicable borrowing conditions, including availability under a borrowing base formula) at any time prior to the maturity of the revolving credit facility, which will be November 30, 2009. Our availability under the senior revolving credit facility is based on a formula that calculates the borrowing base, based on a percentage of the value of accounts receivable, inventory, owned real property and equipment, subject to customary eligibility requirements and net of customary reserves. All borrowings are subject to the satisfaction of customary conditions, including delivery of borrowing notice, accuracy of representations and warranties in all material respects and absence of defaults. Proceeds of the revolving credit facility will be used to provide working capital and for general corporate purposes, including permitted acquisitions, if any, and general corporate needs.

Interest and Fees. Borrowings under the revolving credit facility bear interest, at our option, at the prime rate plus 1.25%, in the case of prime rate loans, or the LIBOR rate plus 2.50%, in case of LIBOR rate loans. At no time will the indebtedness under the revolving credit facility bear interest at a rate per annum less than 3.75%.

We will pay 2.0% per annum on all outstanding letters of credit, unused revolver fees in an amount equal to 0.375% per year on the unused commitments under the revolving credit facility, and servicing fees of $10,000 per quarter. These fees are payable quarterly in arrears and upon the maturity or termination of the commitments, calculated based on the number of days elapsed in a 360-day year. We paid a one-time closing fee of $375,000 to Wells Fargo Foothill, Inc. and approximately $1.5 million of related accounting, legal and other professional fees.

Guarantees and Collateral. Certain of our existing and subsequently acquired or organized domestic subsidiaries which are not Borrowers do and will guarantee (on a senior secured basis) the senior revolving credit facility. Our obligations, along with the obligations of the other Borrowers under the senior revolving credit facility, and these guarantees are secured by substantially all our assets, the Borrowers' assets and the assets of each of our existing and subsequently acquired or organized domestic subsidiaries that is a guarantor of our obligations under the senior revolving credit facility (with such subsidiaries being referred to as the "U.S. subsidiary guarantors"), including but not limited to: (a) a first-priority pledge of all the capital stock of subsidiaries held by us, the Borrowers or any U.S. subsidiary guarantor (which pledge, in the case of any foreign subsidiary, will be limited to 100% of any non-voting stock and 65% of the voting stock of such foreign subsidiary) and (b) perfected first-priority security interests in and mortgages on substantially all of our tangible and intangible assets and all of the tangible and intangible assets of each Borrower and U.S. subsidiary guarantor, including accounts receivable, inventory, equipment, general intangibles, investment property, intellectual

property, real property (other than (i) leased real property and (ii) our existing and future real property located in the State of New York), cash and proceeds of the foregoing (in each case subject to materiality thresholds and other exceptions).

Covenants and Other Matters. The senior revolving credit facility requires us to comply with a minimum fixed charge coverage ratio (when availability falls below $12,500,000) and a maximum annual limit on capital expenditures. The senior revolving credit facility also contains customary representations and warranties, affirmative covenants and events of default, including change of control, cross-defaults to other debt and material judgments.

Capital Leases

We have entered into capital leases for certain buildings and equipment primarily located at our European operations. As of December 31, 2004 we had approximately $1.1 million of outstanding capital lease obligations.

DESCRIPTION OF NOTES

The old notes were, and the registered notes will be, issued under an Indenture (the "Indenture"), dated as of November 30, 2004, by and among us, the Guarantors and the Bank of New York Trust Company, N.A., as Trustee. The terms of the notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act.

The following description is only a summary of the material provisions of the Indenture. We have filed copies of the indenture as an exhibit to the registration statement of which this prospectus forms a part. You may also request copies of this agreement at our address set forth under the heading "—Additional Information." We urge you to read the Indenture because it, not this description, defines your rights as holders of the notes.

In the following summary:

•: "registered notes" refers to the registered notes being offered by this prospectus;
•: "old notes" refers to your old notes that may be exchanged for new notes in the exchange offer;
•: "notes" refers collectively to the registered notes and the old notes;
•: references to the "Company" include only Altra Industrial Motion, Inc. and not any of its subsidiaries; and
•: you can find definitions of various terms under the subsection "—Certain Definitions."

The Company will issue the registered notes solely in exchange for an equal principal amount of old notes in denominations of $1,000 and integral multiples of $1,000. The Trustee will initially act as Paying Agent and Registrar. The notes may be presented for registration or transfer and exchange at the offices of the Registrar. The Company may change any Paying Agent and Registrar without notice to holders of the notes. Any notes that remain outstanding after the completion of this exchange offer, together with the registered notes issued in connection with this exchange offer, will be treated as a single class of securities under the Indenture.

Brief Description of the Notes and the Guarantees

The Notes

The Notes will:

•: be senior obligations of the Company;
•: rank equally in right of payment with all existing and future senior obligations of the Company (including under the Credit Agreement) and senior in right of payment to all existing and future Indebtedness that by its terms is subordinated to the Notes;
•: be secured by second priority security interests in substantially all of the assets of the Company, subject to Permitted Liens; and
•: be unconditionally guaranteed, jointly and severally, by all of the Company's Domestic Restricted Subsidiaries, as set forth under "—Guarantees" below.

The Guarantees

Each Guarantee of a Guarantor will:

•: be a senior obligation of such Guarantor;

•: rank equally in right of payment with all existing and future senior obligations of such Guarantor (including under the Credit Agreement) and senior in right of payment to all existing and future Indebtedness that by its terms is subordinated to the Guarantee of such Guarantor; and
•: be secured by a second priority security interest in substantially all of the assets of such Guarantor, subject to Permitted Liens.

The Notes will be effectively subordinated to all first priority secured Indebtedness of the Company to the extent of the assets securing such Indebtedness, including, without limitation, Indebtedness of the Company under the Credit Agreement, Purchase Money Indebtedness, Capitalized Lease Obligations, secured Acquired Indebtedness and other secured Indebtedness permitted to be incurred under the Indenture. As of April 1, 2005, the Notes are subordinated to approximately $4.1 million of outstanding borrowings and $2.7 million of outstanding letters of credit issued on behalf of the Company. We have up to an additional $23.2 million of borrowing capacity under our Credit Agreement, all of which would become first priority secured Indebtedness, if borrowed.

The Notes will be structurally subordinated to all of the existing and future liabilities of our Foreign Subsidiaries. In the event of a bankruptcy, liquidation or reorganization of any of our Foreign Subsidiaries, such Foreign Subsidiaries will pay the holders of their debt, their trade creditors and holders of preference shares, if any, before they will be able to distribute any of their assets to the Company. See "Risk Factors—The notes will be structurally subordinated to all obligations of our non-guarantor subsidiaries."

As of the date of the Indenture, all of our Subsidiaries will be Restricted Subsidiaries. However, under certain circumstances in compliance with "—Certain Covenants—Limitation on Restricted Payments," we will be permitted to designate certain of our Subsidiaries as "Unrestricted Subsidiaries."

Principal, Maturity and Interest

The Company will issue the registered notes in fully registered form in denominations of $1,000 and integral multiples thereof. The Notes are unlimited in aggregate principal amount, of which $165.0 million in aggregate principal amount will be issued in the exchange offer. The Company may issue additional Notes (the "Additional Notes") from time to time, subject to compliance with the terms of the Indenture. The Notes and any Additional Notes will be substantially identical other than the issuance dates. Unless the context otherwise requires, for all purposes of the Indenture and this "Description of the Notes," references to the Notes include any Additional Notes actually issued. Any Additional Notes issued after this Offering will be secured equally and ratably with the Notes. As a result, the issuance of Additional Notes will have the effect of diluting the security interest in the Collateral for the then outstanding Notes. Because any Additional Notes may not be fungible with the Notes for federal income tax purposes, they may have a different CUSIP number or numbers and be represented by a different global Note or Notes.

The Notes will mature on December 1, 2011.

Interest on the Notes will be payable semiannually in cash on each June 1 and December 1, commencing on June 1, 2005 to the Persons who are registered Holders at the close of business on each May 15 and November 15 immediately preceding the applicable interest payment date. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including the Issue Date. Interest on the Notes will accrue at a rate per annum of 9%.

Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Additional Interest may accrue on the Notes in certain circumstances pursuant to the Registration Rights Agreement.

Collateral

The Notes and the Guarantees will be secured by a second priority lien on substantially all of the assets of the Company and the Guarantors (other than the Syracuse Facility and any other existing and future owned real property located in the State of New York), including a pledge of the Capital Stock owned directly by the Company and the Guarantors; provided, that no such pledge will include more than 65% of the Voting Stock of our Foreign Subsidiaries directly owned by the Company or any Guarantor. In the event that we or the Guarantors, as applicable, execute first-priority mortgages of the Syracuse Facility or any other existing and future owned real property in the State of New York under the Credit Agreement in the future, the Indenture provides that we must simultaneously execute second-priority mortgages of such real property in favor of the Collateral Agent for the benefit of the Holders of the Notes.

The Collateral securing the Notes and the Guarantees will also serve as collateral to secure the obligations under the Credit Agreement. The Company, the Guarantors and the Collateral Agent, on behalf of itself, the Trustee and the Holders, and the Administrative Agent, on behalf of itself and the Lenders, will enter into the Intercreditor Agreement. The Intercreditor Agreement will provide, among other things, that:

(1) Liens on the assets securing the Notes will be junior to the Liens in favor of the Administrative Agent under the Credit Agreement, and consequently, the Lenders will be entitled to receive proceeds from the foreclosure of any such assets prior to the Holders,

(2) during any insolvency proceedings, the Administrative Agent and the Collateral Agent will coordinate their efforts to give effect to the relative priority of their security interests in the Collateral, and

(3) the procedure for enforcing the Liens on the collateral, including (a) the distribution of sale, insurance or other proceeds of the Collateral and (b) permitting the Administrative Agent and the Lenders under the Credit Agreement to enter into and use the Collateral securing the Notes in order to realize on their collateral.

The Intercreditor Agreement will also provide that the Collateral Agent and the Administrative Agent will provide notices to each other with respect to the occurrence of events of default and the acceleration of the Notes or the Indebtedness outstanding under the Credit Agreement, as the case may be.

Upon the occurrence of an Event of Default, the proceeds from the sale of Collateral securing the Notes may be insufficient to satisfy the Company's obligations under the Notes. No appraisals of any of the Collateral have been prepared in connection with the Offering. Moreover, the amount to be received upon such a sale would be dependent upon numerous factors, including the condition, age and useful life of the Collateral at the time of the sale, as well as the timing and manner of the sale. By its nature, all or some of the Collateral will be illiquid and may have no readily ascertainable market value. Accordingly, there can be no assurance that the Collateral, if saleable, can be sold in a short period of time.

Subject to the terms of the Collateral Agreements, the Company and the Guarantors will have the right to remain in possession and retain exclusive control of the Collateral securing the Notes to freely operate the Collateral and to collect, invest and dispose of any income therefrom in their sole discretion.

The security interests granted by the Company and the Guarantors that secure the Notes and the Guarantees will also be junior to Permitted Liens securing other existing Indebtedness. Subject to the restrictions on incurring Indebtedness in the Indenture and the Credit Agreement, the Company and its

Restricted Subsidiaries will also have the right to grant Liens securing Acquired Indebtedness, Capital Lease Obligations and Purchase Money Indebtedness.

To the extent third parties hold Permitted Liens, such third parties may have rights and remedies with respect to the property subject to such Liens that, if exercised, could adversely affect the value of the Collateral. Given the intangible nature of certain of the Collateral, any such sale of such Collateral separately from the assets of the Company as a whole may not be feasible. The ability of the Company to grant or perfect a security interest in certain Collateral may be limited by legal or other logistical considerations. The ability of the Holders to realize upon the Collateral may be subject to certain bankruptcy law limitations in the event of a bankruptcy. See "—Certain Bankruptcy and Other Limitations."

The Company is permitted to form new Restricted Subsidiaries and, subject to certain restrictions in the Indenture and the Credit Agreement, to transfer all or a portion of the Collateral to one or more of its Restricted Subsidiaries; provided, that each such new Restricted Subsidiary will be required to execute a Guarantee in respect of the Company's obligations under the Notes and the Indenture and a supplement to the Security Agreement granting to the Collateral Agent a security interest in all of the assets of such Restricted Subsidiary on the same basis and subject to the same limitations as described in this section. See "—Certain Covenants—Additional Subsidiary Guarantees."

So long as no Event of Default shall have occurred and be continuing, and subject to certain terms and conditions in the Indenture and the Collateral Agreements, each of the Company and the Guarantors will be entitled to receive all cash dividends, interest and other payments made upon or with respect to the equity interests of any of its Subsidiaries and to exercise any voting, consensual rights and other rights pertaining to such Collateral pledged by it. Upon the occurrence and during the continuance of an Event of Default upon notice from the Collateral Agent, and subject to the Intercreditor Agreement,

(a) all rights of the Company or such Guarantor, as the case may be, to exercise such voting, consensual rights, or other rights shall cease and all such rights shall become vested in the Collateral Agent, which, to the extent permitted by law, shall have the sole right to exercise such voting, consensual rights or other rights,

(b) all rights of the Company or such Guarantor, as the case may be, to receive cash dividends, interest and other payments made upon or with respect to the Collateral shall cease, and such cash dividends, interest and other payments shall be paid to the Collateral Agent, and

(c) the Collateral Agent may sell the Collateral or any part thereof in accordance with, and subject to the terms of, the Collateral Agreements.

All funds distributed under the Collateral Agreements and received by the Collateral Agent for the ratable benefit of the Holders shall be distributed by the Collateral Agent in accordance with the provisions of the Indenture.

The collateral release provisions of the Indenture permit the release of Collateral without substitution of collateral having at least equal value under certain circumstances, including asset sales or dispositions made in compliance with the Indenture.

The Company will be entitled to releases of assets (including Capital Stock of Restricted Subsidiaries) included in the Collateral from the Liens securing the Notes under any one or more of the following circumstances:

(1) to enable the Company to consummate asset sales or dispositions that are not Asset Sales or that are Asset Sales permitted under the covenant described below under the caption "—Certain Covenants—Limitation on Asset Sales;"

(2) to enable the Company to consummate mergers, consolidations or sales of assets that are permitted under the covenant described below under the caption "—Certain Covenants—Mergers, Consolidation and Sale of Assets;"

(3) if any Subsidiary that is a Guarantor is released from its Guarantee, that Subsidiary's assets will also be released;

(4) if the Company exercises its legal defeasance option or our covenant defeasance option as described below under the caption "—Legal Defeasance and Covenant Defeasance;" or

(5) upon satisfaction and discharge of the Indenture or payment in full of the principal of and premium, if any, accrued and unpaid interest and Additional Interest, if any, on the Notes and all other Obligations that are then due and payable.

Certain Bankruptcy and Other Limitations

The right of the Collateral Agent to repossess and dispose or otherwise exercise remedies in respect of the Collateral upon the occurrence of an Event of Default is likely to be significantly impaired by applicable bankruptcy law if a bankruptcy proceeding were to be commenced by or against the Company or any of its Domestic Restricted Subsidiaries prior to the Collateral Agent having repossessed and disposed of the Collateral or otherwise completed the exercise of its remedies with respect to the Collateral. Under the Bankruptcy Code, a secured creditor such as the Collateral Agent is prohibited from repossessing its security from a debtor in a bankruptcy case, or from disposing of security repossessed from such debtor, without obtaining relief from the automatic stay imposed by Section 362 for the Bankruptcy Code. Moreover, the Bankruptcy Code permits the debtor to continue to retain and to use collateral even though the debtor is in default under the applicable debt instruments; provided that, under the Bankruptcy Code, the secured creditor is given "adequate protection." The meaning of the term "adequate protection" may vary according to circumstances, but it is intended in general to protect the value of the secured creditor's interest in the collateral securing the obligations owed to it and may include cash payments or the granting of additional security, if and at such times as the bankruptcy court in its discretion determines, for any diminution in the value of such collateral as a result of the stay of repossession or disposition or any use of the collateral by the debtor during the pendency of the bankruptcy case. In view of the lack of a precise definition of the term "adequate protection" and the broad discretionary powers of a bankruptcy court, it is impossible to predict how long payments under the Notes could be delayed following commencement of a bankruptcy case, whether or when the Collateral Agent could repossess or dispose of the Collateral or whether or to what extent Holders would be compensated for any delay in payment or loss of value of the Collateral through the requirement of "adequate protection."

Moreover, the Collateral Agent may need to evaluate the impact of the potential liabilities before determining to foreclose on Collateral consisting of real property because a secured creditor that holds a lien on real property may be held liable under environmental laws for the costs of remediating or preventing release or threatened releases of hazardous substances at such real property. Consequently, the Collateral Agent may decline to foreclose on such Collateral or exercise remedies available if it does not receive indemnification to its satisfaction from the Holders.

In addition, because a portion of the Collateral consists of pledges of a portion of the Capital Stock of certain of our Foreign Subsidiaries, the validity of those pledges under applicable foreign law, and the ability of the Holders to realize upon that Collateral under applicable foreign law, to the extent applicable, may be limited by such law, which limitations may or may not affect such Liens.

The Collateral Agent's ability to foreclose on the Collateral may be subject to lack of perfection, the consent of third parties, prior liens and practical problems associated with the realization of the Collateral Agent's Lien on the Collateral. See "Risk Factors—Risks Related to this Offering—The

proceeds from the collateral securing the notes may not be sufficient to pay all amounts owed under the notes if an event of default occurs and your right to receive payments under the notes will effectively be subordinated to payments under our senior revolving credit facility to the extent of the value of the assets securing that indebtedness."

Guarantees

The full and prompt payment of the Company's payment obligations under the Notes and the Indenture will be guaranteed, jointly and severally, by all present and future, direct and indirect, Domestic Restricted Subsidiaries. Each Guarantor will fully and unconditionally guarantee on a senior secured basis (each a "Guarantee" and, collectively, the "Guarantees"), jointly and severally, to each Holder and the Trustee, the full and prompt performance of the Company's Obligations under the Indenture and the Notes, including the payment of principal of, interest on, premium, if any, on and Additional Interest, if any, on the Notes. The Guarantee of each Guarantor will rank senior in right of payment to all existing and future subordinated Indebtedness of such Guarantor and equally in right of payment with all other existing and future senior Indebtedness of such Guarantor. The obligations of each Guarantor will be limited to the maximum amount which, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under the Indenture, will result in the obligations of such Guarantor under the Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. The net worth of any Guarantor for such purpose shall include any claim of such Guarantor against the Company for reimbursement and any claim against any other Guarantor for contribution. Each Guarantor may consolidate with or merge into or sell its assets, including Capital Stock of Restricted Subsidiaries, to the Company or another Guarantor without limitation. See "—Certain Covenants—Mergers, Consolidation and Sale of Assets" and "—Limitation on Asset Sales."

A Guarantor will be released from its Guarantee without any action required on the part of the Trustee or any Holder:

(1) if (a) all of the Capital Stock issued by such Guarantor or all or substantially all of the assets of such Guarantor are sold or otherwise disposed of (including by way of merger or consolidation) to a Person other than the Company or any of its Domestic Restricted Subsidiaries or (b) such Guarantor ceases to be a Restricted Subsidiary, and the Company otherwise complies, to the extent applicable, with the covenant described below under "—Certain Covenants—Limitation on Asset Sales;"

(2) if the Company designates such Guarantor as an Unrestricted Subsidiary in accordance with the covenant described below under "—Certain Covenants—Limitation on Restricted Payments;"

(3) if the Company exercises the legal defeasance option or its covenant defeasance option as described below under "—Legal Defeasance and Covenant Defeasance;" or

(4) upon satisfaction and discharge of the Indenture or payment in full of the principal of premium, if any, accrued and unpaid interest and Additional Interest, if any, on the Notes and all other Obligations that are then due and payable.

At the Company's request and expense, the Trustee will execute and deliver an instrument evidencing such release. A Guarantor may also be released from its obligations under its Guarantee in connection with a permitted amendment of the Indenture. See "—Modification of the Indenture."

As of the date of the Indenture, all of our Subsidiaries will be Restricted Subsidiaries. However, under certain circumstances described below under the subheading "—Certain Covenants—Limitation

on Restricted Payments," the Company will be permitted to designate certain of its Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to the restrictive covenants of the Indenture and will not guarantee the Notes. Also, as of the date of the Indenture, none of the Company's Foreign Subsidiaries will guarantee the Notes. The Notes will be structurally subordinated to all of the existing and future liabilities of our Subsidiaries that do not guarantee the Notes.

Optional Redemption

Except as described below, the Notes are not redeemable before December 1, 2008. On or after December 1, 2008, the Company may redeem the Notes, at its option, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on December 1 of the year set forth below:

Year	Percentage
2008	104.500	%
2009	102.250	%
2010 and thereafter	100.000	%

In addition, the Company must pay accrued and unpaid interest and Additional Interest, if any, on the Notes redeemed to the date of redemption (subject to the right of the Holders of the relevant record date to receive interest due on the relevant interest payment date).

In addition, at any time, or from time to time, until December 1, 2007, the Company may, at its option, use an amount not to exceed the net cash proceeds of one or more Equity Offerings to redeem up to 35% of the aggregate principal amount of the Notes (which includes Additional Notes, if any) originally issued under the Indenture at a redemption price of 109% of the aggregate principal amount thereof, plus accrued and unpaid interest and Additional Interest, thereon, if any, to the date of redemption; provided that:

(1) at least 65% of the original principal amount of Notes (which includes Additional Notes, if any) issued under the Indenture remains outstanding immediately after any such redemption; and

(2) the Company makes such redemption not more than 120 days after the consummation of any such Equity Offering.

Selection and Notice of Redemption

In the event that the Company chooses to redeem less than all of the Notes, selection of the Notes for redemption will be made by the Trustee either:

(1) in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed; or

(2) if the Notes are not then listed on a national securities exchange, on a pro rata basis, by lot or by such method as the Trustee may reasonably determine is fair and appropriate.

If a partial redemption is made with the proceeds of an Equity Offering, the Trustee will select the Notes only on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to DTC procedures), unless such method is otherwise prohibited. No Notes of a principal amount of $1,000 or less shall be redeemed in part and Notes of a principal amount in excess of $1,000 may be redeemed in part in multiples of $1,000 only.

Notice of redemption will be mailed by first-class mail at least 30 but not more than 60 days before the redemption date to each Holder to be redeemed at its registered address. If Notes are to be

redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed. A new Note in a principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note (or appropriate adjustments to the amount and beneficial interests in the Global Note will be made).

The Company will pay the redemption price for any Note together with accrued and unpaid interest and Additional Interest, if any, thereon to the date of redemption. On and after the redemption date, interest will cease to accrue on Notes or portions thereof called for redemption as long as the Company has deposited with the paying agent funds in satisfaction of the applicable redemption price pursuant to the Indenture.

Mandatory Redemption; Offers to Purchase; Open Market Purchases

The Company is not required to make any mandatory redemption or sinking fund payments with respect to the Notes. However, under certain circumstances, the Company may be required to offer to purchase the Notes as described under the captions "—Repurchase upon Change of Control" and "—Certain Covenants—Limitation on Asset Sales." The Company may at any time and from time to time purchase Notes in the open market or otherwise.

Repurchase upon Change of Control

Upon the occurrence of a Change of Control, the Company will be required to offer to purchase all or a portion (in integral multiples of $1,000) of each Holder's Notes pursuant to the offer described below (the "Change of Control Offer"), at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase.

Within 30 days following the date upon which the Change of Control occurred, the Company must send, by registered first-class mail, an offer to each Holder with a copy to the Trustee. Such offer shall state, among other things, the purchase date, which must be no earlier than 30 days nor later than 60 days from the date such notice is mailed, other than as may be required by law (the "Change of Control Payment Date").

Holders electing to have a Note purchased pursuant to a Change of Control Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the paying agent at the address specified in the notice prior to the close of business on the third business day prior to the Change of Control Payment Date. If only a portion of a Note is purchased pursuant to a Change of Control Offer, a new Note in a principal amount equal to the portion thereof not purchased will be issued in the name of the Holder thereof upon cancellation of the original Note (or appropriate adjustments to the amount and beneficial interests in a Global Note will be made). Notes (or portions thereof) purchased pursuant to a Change of Control Offer will be cancelled and cannot be reissued.

The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

If a Change of Control Offer is made, there can be no assurance that the Company will have available funds sufficient to pay the Change of Control purchase price for all the Notes that might be delivered by Holders seeking to accept the Change of Control Offer. If the Company is required to purchase outstanding Notes pursuant to a Change of Control Offer, the Company would be required to seek third-party financing to the extent it does not have available funds to meet its purchase

obligations. However, there can be no assurance that the Company would be able to obtain such financing on acceptable terms or at all, and the terms of the Credit Agreement, the Indenture or future debt and financing agreements may restrict the ability of the Company to obtain such financing.

Restrictions in the Indenture described herein on the ability of the Company and its Restricted Subsidiaries to incur additional Indebtedness, to grant Liens on its property, to make Restricted Payments and to make Asset Sales may also make more difficult or discourage a takeover of the Company, whether favored or opposed by the management or the Board of Directors of the Company. Such restrictions and the restrictions on transactions with Affiliates may, in certain circumstances, make more difficult or discourage any leveraged buyout of the Company or any of its Subsidiaries by the management of the Company. While such restrictions cover a wide variety of arrangements that have traditionally been used to effect highly leveraged transactions, the Indenture may not afford the Holders protection in all circumstances from the adverse aspects of a highly leveraged transaction, reorganization, restructuring, merger, recapitalization or similar transaction.

One of the events that constitutes a Change of Control under the Indenture is the disposition of "all or substantially all" of the Company's assets under certain circumstances. This term has not been interpreted under New York law (which is the governing law of the Indenture) to represent a specific quantitative test. As a consequence, there can be no assurance as to how a court interpreting New York law would interpret the phrase.

The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the "Change of Control" provisions of the Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the "Change of Control" provisions of the Indenture by virtue thereof.

Certain Covenants

The Indenture will contain, among others, the following covenants:

Limitation on Incurrence of Additional Indebtedness. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, "incur") any Indebtedness (other than Permitted Indebtedness). Notwithstanding the foregoing the Company and the Guarantors may incur Indebtedness (including Acquired Indebtedness) if on the date of (after giving effect to) the incurrence of such Indebtedness:

(i) no Default or Event of Default shall have occurred and be continuing; and

(ii) the Consolidated Fixed Charge Coverage Ratio of the Company will be at least 2.0 to 1.0.

Limitation on Restricted Payments. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly:

(1) declare or pay any dividend or make any distribution (other than dividends or distributions payable (i) in Qualified Capital Stock of the Company or (ii) to the Company or a Guarantor) on or in respect of shares of Capital Stock of the Company or its Restricted Subsidiaries;

(2) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company, any Restricted Subsidiary or any Affiliate of the Company (other than any such Capital Stock owned by the Company or any Guarantor);

(3) make any principal payment on, purchase, defease, redeem, prepay or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, any Indebtedness of the Company or any Guarantor that is subordinate or junior in right of payment to the Notes or a Guarantee; or

(4) make any Investment (other than Permitted Investments);

(each of the foregoing actions set forth in clauses (1), (2), (3) and (4) being referred to as a "Restricted Payment"), if at the time of such Restricted Payment or immediately after giving effect thereto:

(i) a Default or an Event of Default shall have occurred and be continuing;

(ii) the Company is not permitted to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to the covenant described under "—Limitation on Incurrence of Additional Indebtedness;" or

(iii) the aggregate amount of Restricted Payments (including such proposed Restricted Payment) made subsequent to the Issue Date (the amount expended for such purposes, if other than in cash, being the Fair Market Value of such property at the time of the making thereof) shall exceed the sum of:

(A) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated Net Income is a loss, minus 100% of such loss) of the Company during the period beginning on the first day of the first fiscal quarter after the Issue Date and ending on the last day of the Company's most recent fiscal quarter ending prior to the date of such Restricted Payment for which financial statements are available (the "Reference Date") (treating such period as a single accounting period); plus

(B) 100% of the aggregate net cash proceeds received by the Company from any Person (other than a Subsidiary of the Company) from the issuance and sale subsequent to the Issue Date and on or prior to the Reference Date of Qualified Capital Stock of the Company (which shall include capital contributions to the Company) (excluding any net proceeds from an Equity Offering to the extent used to redeem Notes pursuant to the provisions described under "Redemption—Optional Redemption Upon Equity Offerings"); plus

(C) 100% of the aggregate net cash proceeds received from the issuance of Indebtedness or shares of Disqualified Capital Stock of the Company (other than to a Subsidiary of the Company) that have been converted into or exchanged for Qualified Capital Stock of the Company subsequent to the Issue Date and on or prior to the Reference Date; plus

(D) the net reduction in the Investments (other than Permitted Investments) treated as a Restricted Payment previously made by the Company or any Restricted Subsidiary in any Person (other than a Restricted Subsidiary) to the extent such reduction results from net proceeds received by the Company and its Restricted Subsidiaries upon the (x) repurchase, repayment or redemption of such Investments by such Person (but only to the extent constituting return of capital) and (y) the sale of such Investment (but only to the extent such sale does not increase Consolidated Net Income of the Company), in each case, in an amount not exceeding the aggregate amount of such Investments; plus

(E) (1) the Company's portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of any Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary in an amount not to exceed the amount of Investments (excluding Permitted Investments) previously made (and treated as a Restricted Payment) by the Company of any or its Restricted Subsidiaries in such Unrestricted Subsidiary and (2) the aggregate amount of cash dividends or cash distributions

received by the Company or the Guarantors from an Unrestricted Subsidiary from the Issue Date to the Reference Date.

In the case of clause (iii)(B) above, any net cash proceeds from issuances and sales of Qualified Capital Stock of the Company financed directly or indirectly using funds borrowed from the Company or any Subsidiary of the Company, shall be excluded until and to the extent such borrowing is repaid.

The provisions set forth in the immediately preceding paragraph do not prohibit:

(1) the payment of any dividend or other distribution or redemption within 60 days after the date of declaration of such dividend or call for redemption if such payment would have been permitted on the date of declaration or call for redemption;

(2) the acquisition of any shares of Qualified Capital Stock of the Company, solely in exchange for other shares of Qualified Capital Stock of the Company;

(3) the acquisition of any Indebtedness of the Company or the Guarantors that is subordinate or junior in right of payment to the Notes and Guarantees or the acquisition of Disqualified Capital Stock either (i) solely in exchange for shares of Qualified Capital Stock of the Company, or (ii) through the application of net proceeds of a sale for cash (other than to a Subsidiary of the Company) within 60 days after such sale if no Default or Event of Default would exist after giving effect thereto, of Refinancing Indebtedness;

(4) an Investment either (i) solely in exchange for shares of Qualified Capital Stock of the Company or (ii) through the application of the net proceeds of a sale for cash (other than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the Company within 60 days after such sale;

(5) in the event of a Change of Control, and if no Default shall have occurred and be continuing or would exist after giving effect thereto, the payment, purchase, redemption, defeasance, satisfaction, discharge or other acquisition or retirement of Indebtedness that is subordinated to the Notes or the Guarantees, in each case, at a purchase price not greater than 101% of the principal amount of such Indebtedness (or, if such Indebtedness was issued with original issue discount, 101% of the accreted value), plus any accrued and unpaid interest thereon; provided, however, that prior to such payment, purchase, redemption, defeasance, satisfaction, discharge or other acquisition or retirement, the Company has made a Change of Control Offer with respect to the Notes as a result of such Change of Control and has repurchased all Notes validly tendered and not withdrawn in connection with such Change of Control Offer;

(6) (i) general corporate overhead expenses of Holdings, including, without limitation, franchise taxes and other fees required to maintain the existence of Holdings, insurance premiums and indemnification claims made by directors or officers of Holdings attributable to the ownership or operation of the Company and its Subsidiaries and (ii) reasonable fees and expenses paid to members of the board of directors of Holdings; provided, that such fees and expenses described in this clause (ii) are in an aggregate amount not to exceed $500,000 in any fiscal year;

(7) the application of the proceeds from the issuance of the Notes on the Issue Date as described under the "Use of Proceeds" section of this prospectus;

(8) advances to any direct or indirect parent entity of the Company to be used by such entity solely to pay federal, state and local income taxes made no earlier than five days prior to the date on which such entity is required to make such payment in an amount not to exceed the aggregate tax liability of the Company and its Restricted Subsidiaries for such calendar year determined as if the Company and its Restricted Subsidiaries were a separate affiliated group (as defined in Section 1504 of the Internal Revenue Code of 1986, as amended) filing a consolidated return, or,

to the extent applicable, a separate group filing combined or unitary returns, and then only to the extent that any such payments are actually paid by such entity to governmental entities;

(9) if no Default or Event of Default has occurred and is continuing or would exist after giving effect thereto, the purchase, repurchase, redemption or other acquisition of Capital Stock of the Company from employees, former employees, directors, or former directors of the Company (or permitted transferees of such employees, former employees, directors or former directors), pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors of the Company under which such individuals purchase or sell, or are granted the option to purchase or sell, shares of such Capital Stock; provided, that the aggregate amount of such repurchases and other acquisitions in any calendar year shall not exceed $500,000;

(10) if no Default or Event of Default has occurred and is continuing or would exist after giving effect thereto, the payment of the consulting fee pursuant to the Management Agreement; provided, that the aggregate amount of such fee in any calendar year shall not exceed $1.0 million; and

(11) if no Default or Event of Default shall have occurred and be continuing or would exist after giving effect thereto, other Restricted Payments not to exceed $10.0 million in the aggregate since the Issue Date.

In determining the aggregate amount of Restricted Payments made subsequent to the Issue Date in accordance with clause (iii) of the first paragraph of this "Limitation on Restricted Payments" covenant amounts expended pursuant to clauses (1), (4)(ii) and (9) shall be included in such calculation and amounts expended pursuant to clauses (2), (3), 4(i), (5), (6), (7), (8), (10) and (11) shall not be included in such calculation.

Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment complies with the Indenture and setting forth in reasonable detail the basis upon which the required calculations were computed, which calculations may be based upon the Company's latest available internal quarterly financial statements.

Limitation on Asset Sales. The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(1) the Company or the applicable Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets sold or otherwise disposed;

(2) at least 75% of the consideration received by the Company or the Restricted Subsidiary, as the case may be, from such Asset Sale is in the form of cash or Cash Equivalents received substantially concurrent with the time of such disposition; provided that the amount of any liabilities (as shown on the most recent applicable balance sheet) of the Company or such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes) that are assumed by the transferee of any such assets shall be deemed to be cash for purposes of this provision if the documents governing such liabilities provide that there is no further recourse to the Company or any of its Subsidiaries with respect to such liabilities; and

(3) the Company shall apply, or cause such Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within 360 days of receipt thereof either:

(a) to repay any outstanding Indebtedness under the Credit Agreement and correspondingly reduce the commitments thereunder;

(b) to reinvest in property, plant, equipment or other long-term assets that replace the properties and assets that were the subject of such Asset Sale or that will be used or useful in the Permitted Business (including expenditures for maintenance, repair or improvement of existing properties and assets); or

Pending the final application of Net Cash Proceeds, the Company may temporarily reduce revolving credit borrowings or invest such Net Cash Proceeds in Cash Equivalents. On the 361^st day after an Asset Sale or such earlier date, if any, as the Board of Directors of the Company or of such Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses (3)(a), 3(b) or 3(c) of the preceding paragraph (each, a "Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which have not been applied (each a "Net Proceeds Offer Amount") shall be applied by the Company or such Restricted Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than 45 days following the applicable Net Proceeds Offer Trigger Date, from all Holders of the Notes the maximum principal amount of Notes that may be purchased with the Net Proceeds Offer Amount at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of purchase.

If at any time any consideration other than cash and Cash Equivalents received by the Company or any Restricted Subsidiary, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash or Cash Equivalents (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to be an Asset Sale on the date of such conversion or disposition, as the case may be, and the Net Cash Proceeds thereof shall be applied in accordance with this covenant.

The Company may defer any Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $5.0 million resulting from one or more Asset Sales in which case the accumulation of such amount shall constitute a Net Proceeds Offer Trigger Date (at which time, the entire unutilized Net Proceeds Offer Amount, and not just the amount in excess of $5.0 million, shall be applied as required pursuant to this covenant). If any of the Net Cash Proceeds Amount remains after consummation of a Net Proceeds Offer, the Company may use such amount for any corporate purpose to the extent not otherwise prohibited by the Indenture and the Net Proceeds Offer Amount will be reset at zero.

In the event of the transfer of substantially all (but not all) of the property and assets of the Company and its Restricted Subsidiaries as an entirety to a Person in a transaction permitted under "—Merger, Consolidation and Sale of Assets" that does not constitute a Change of Control, the successor entity shall be deemed to have sold the properties and assets of the Company and its Restricted Subsidiaries not so transferred for purposes of this covenant, and shall comply with the provisions of this covenant with respect to such deemed sale as if it constituted an Asset Sale. The Fair Market Value of such properties and assets of the Company or its Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for purposes of this covenant.

Each notice of a Net Proceeds Offer shall be mailed first class, postage prepaid, to the record Holders as shown on the register of Holders within 20 days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee. Upon receiving notice of the Net Proceeds Offer, Holders may elect to tender their Notes in whole or in part in integral multiples of $1,000 in exchange for cash. To the extent Holders properly tender Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of tendering Holders will be purchased on a pro rata basis (based on amounts tendered). A Net Proceeds Offer shall remain open for a period of 20 business days or such longer period as may be required by law.

The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with the "Asset Sale" provisions of the Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the "Asset Sale" provisions of the Indenture by virtue of such compliance.

Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions on or in respect of its Capital Stock;

(2) make loans or advances or to pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary; or

(3) transfer any of its property or assets to the Company or any other Restricted Subsidiary, except for such encumbrances or restrictions existing:

(a) under applicable law, rule, regulation, order, license or permit;

(b) under the Indenture and the Collateral Agreements;

(c) by reason of customary non-assignment provisions of any lease of any Restricted Subsidiary to the extent such provisions restrict the transfer of the lease or the property leased thereunder;

(d) under any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired;

(e) under the Credit Agreement;

(f) by reason of restrictions on the transfer of assets subject to any Permitted Lien;

(g) under customary agreements to sell assets or Capital Stock permitted to be sold under the Indenture pending the closing of such sale;

(h) under Purchase Money Indebtedness or Capitalized Lease Obligations permitted under the Indenture; provided, that such encumbrances and restrictions relate only to the assets financed with such Indebtedness;

(i) by reason of restrictions on cash or other deposits under bona fide arrangements with customers entered into in the ordinary course of business, consistent with past practice;

(j) on any Foreign Restricted Subsidiary under Indebtedness of such Subsidiary permitted under the Indenture; or

(k) under Refinancing Indebtedness incurred to Refinance the Indebtedness referred to in clause (b), (d) or (e); provided, that the provisions relating to such encumbrance or restriction contained in any such Indebtedness are no more adverse to the Holders and no less favorable or more onerous to the Company and its Restricted Subsidiaries than the provisions relating to such encumbrance or restriction contained in agreements referred to in the Indebtedness being Refinanced.

Limitation on Issuances and Sales of Capital Stock of Subsidiaries. The Company will not, and will not permit or cause any of its Restricted Subsidiaries to, transfer, convey, issue or sell any Capital

Stock of any Restricted Subsidiary to any Person (other than to the Company or to a Wholly Owned Subsidiary and directors' qualifying shares); provided, that this provision shall not prohibit:

(1) any transfer, issuance or sale if, immediately after giving effect thereto, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any Investment in such Person remaining after giving effect to such issuance or sale would have been permitted to be made under the "—Limitations on Restricted Payments" covenant if made on the date of such issuance or sale or

(2) the sale of all of the Capital Stock of a Restricted Subsidiary in compliance with the provisions of the "—Limitations on Asset Sales" covenant.

Limitation on Liens. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist any Liens (other than Permitted Liens) of any kind against or upon any property or assets of the Company or any of its Restricted Subsidiaries whether owned on the Issue Date or acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise convey any right to receive income or profits therefrom.

Merger, Consolidation and Sale of Assets. The Company will not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company's assets (determined on a consolidated basis for the Company and its Restricted Subsidiaries) whether as an entirety or substantially as an entirety to any Person unless:

(1) either:

(a) the Company shall be the surviving or continuing corporation; or

(b) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company and of the Company's Restricted Subsidiaries substantially as an entirety (the "Surviving Entity"):

(x) shall be an entity organized and validly existing under the laws of the United States or any State thereof or the District of Columbia; and

(y) shall expressly assume (i) by supplemental indenture (in form and substance reasonably satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, interest and Additional Interest, if any, on all of the Notes and the performance of every covenant of the Notes, the Indenture and the Registration Rights Agreement on the part of the Company to be performed or observed thereunder and (ii) by amendment, supplement or other instrument (in form and substance reasonably satisfactory to the Trustee and the Collateral Agent), executed and delivered to the Trustee, all obligations of the Company under the Collateral Agreements, and in connection therewith shall cause such instruments to be filed and recorded in such jurisdictions and take such other actions as may be required by applicable law to perfect or continue the perfection of the Lien created under the Collateral Agreements on the Collateral owned by or transferred to the surviving entity;

(2) immediately after giving effect to such transaction and the assumption contemplated by clause (1)(b)(y) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction), (a) the Company or such Surviving Entity, as the case may be, is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the covenant described

under "—Limitation on Incurrence of Additional Indebtedness" and (b) no Default or Event of Default shall have occurred or be continuing; and

(3) the Company or the Surviving Entity shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the applicable provisions of the Indenture and that all conditions precedent in the Indenture relating to such transaction have been satisfied.

For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries of the Company, the Capital Stock of which constitutes all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

Upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of the Company in accordance with the foregoing, in which the Company is not surviving or the continuing corporation, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture and the Notes with the same effect as if such surviving entity had been named as such. Upon such substitution, the Company and any Guarantors that remain Subsidiaries of the Company shall be released and discharged from their obligations under the Indenture and the Guarantees.

Each Guarantor will not, and the Company will not cause or permit any Guarantor to, consolidate with or merge with or into any Person, other than the Company or any other Guarantor unless:

(1) the entity formed by or surviving any such consolidation or merger (if other than the Guarantor) or to which such sale, lease, conveyance or other disposition shall have been made is a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia;

(2) such entity assumes (a) by supplemental indenture (in form and substance reasonably satisfactory to the Trustee), executed and delivered to the Trustee, all of the obligations of the Guarantor under the Guarantee and the performance of every covenant of the Guarantee, the Indenture and the Registration Rights Agreement and (b) by amendment, supplement or other instrument (in form and substance satisfactory to the Trustee and the Collateral Agent) executed and delivered to the Trustee and the Collateral Agent, all obligations of the Guarantor under the Collateral Agreements and in connection therewith shall cause such instruments to be filed and recorded in such jurisdictions and take such other actions as may be required by applicable law to perfect or continue the perfection of the Lien created under the Collateral Agreements on the Collateral owned by or transferred to the surviving entity; and

(3) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing.

Limitations on Transactions with Affiliates. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its Affiliates (each an "Affiliate Transaction"), other than:

(x) Permitted Affiliate Transactions, and

(y) Affiliate Transactions on terms that are no less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company or such Restricted Subsidiary.

With respect to all Affiliate Transactions (other than Permitted Affiliated Transactions):

(i) the Company will deliver an Officers' Certificate to the Trustee certifying that such transactions are in compliance with clause (y) of the preceding paragraph;

(ii) if such Affiliate Transaction involves aggregate payments or other property with a Fair Market Value in excess of $2.5 million shall be approved by a majority of the members of the Board of Directors of the Company (including a majority of the disinterested members thereof), as the case may be, such approval to be evidenced by a Board Resolution stating that such Board of Directors has determined that such transaction complies with the foregoing provisions; and

(iii) if such Affiliate Transaction involves an aggregate Fair Market Value of more than $5.0 million, the Company will, prior to the consummation thereof, obtain a favorable opinion as to the fairness of the financial terms of such transaction or series of related transactions to the Company or the relevant Restricted Subsidiary, as the case may be, from an Independent Financial Advisor and file the same with the Trustee.

The restrictions set forth in the first paragraph of this covenant will not apply to the following transactions (collectively, "Permitted Affiliate Transactions"):

(1) reasonable fees and compensation paid to and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any Restricted Subsidiary;

(2) transactions exclusively between or among the Company and any of its Wholly Owned Restricted Subsidiaries or exclusively between or among such Wholly Owned Restricted Subsidiaries, provided, that such transactions are not otherwise prohibited by the Indenture;

(3) any agreement as in effect as of the Issue Date or any transaction contemplated thereby and any amendment thereto or any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders, the Company or the Restricted Subsidiaries in all material respects than the original agreement as in effect on the Issue Date;

(4) Restricted Payments permitted by the Indenture or Permitted Investments;

(5) any merger or other transaction with an Affiliate solely for the purpose of reincorporating the Company in another jurisdiction or creating a holding company of the Company;

(6) any employment, stock option, stock repurchase, employee benefit compensation, business expense reimbursement, severance, termination or other employment-related agreements, arrangements or plans entered into in good faith by the Company or any of its Restricted Subsidiaries in the ordinary course of business;

(7) sales or purchases of inventory, other products or services to or from any Affiliate of the Company entered into in the ordinary course of business on terms no less favorable to the Company and its Subsidiaries than those that could be obtained at the time of such sale or purchase in arm's-length dealings with a Person who is not an Affiliate; and

(8) any agreement existing and as in effect on the Issue Date, including the Management Agreement.

Additional Subsidiary Guarantees. If the Company or any of its Restricted Subsidiaries acquires or creates another Domestic Restricted Subsidiary after the Issue Date (other than an Unrestricted Subsidiary), then the Company shall cause such Domestic Restricted Subsidiary to:

(1) execute and deliver to the Trustee a supplemental indenture in form reasonably satisfactory to the Trustee pursuant to which such Subsidiary shall unconditionally guarantee on a senior secured basis all of the Company's obligations under the Notes and the Indenture on the terms set forth in the Indenture;

(2) execute and deliver to the Collateral Agent such amendments to the Collateral Agreements as the Collateral Agent deems necessary or advisable in order to grant to the Collateral Agent, for the benefit of the Holders, a perfected security interest in the Capital Stock of such new Domestic Restricted Subsidiary and any debt securities of such new Subsidiary, subject to the Permitted Liens, which are owned by the Company or Subsidiary and required to be pledged pursuant to the Security Agreement, (b) deliver to the Collateral Agent any certificates representing such Capital Stock and debt securities, together with (i) in the case of such Capital Stock, undated stock powers or instruments of transfer, as applicable, endorsed in blank, and (ii) in the case of such debt securities, endorsed in blank, in each case executed and delivered by an Officer of the Company or such Subsidiary, as the case may be;

(3) take such actions as are necessary or as the Collateral Agent reasonably determines to be advisable to grant to the Collateral Agent for the benefit of the Holders a perfected security interest in the assets of such new Domestic Restricted Subsidiary, subject to the Permitted Liens, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Security Agreement or by law or as may be reasonably requested by the Collateral Agent;

(4) take such further action and execute and deliver such other documents specified in the Indenture or otherwise reasonably requested by the Trustee or the Collateral Agent to effectuate the foregoing; and

(5) deliver to the Trustee an Opinion of Counsel that such supplemental indenture and any other documents required to be delivered have been duly authorized, executed and delivered by such Domestic Restricted Subsidiary and constitutes a legal, valid, binding and enforceable obligations of such Domestic Restricted Subsidiary and such other opinions regarding the perfection of such Liens in the assets of such Domestic Restricted Subsidiary as provided for in the Indenture.

Thereafter, such Subsidiary shall be a Guarantor for all purposes of the Indenture.

Impairment of Security Interest. Neither the Company nor any of its Restricted Subsidiaries will (a) take or omit to take any action which would adversely affect or impair in any material respect the Liens (other than the incurrence of Permitted Liens) in favor of the Collateral Agent with respect to the Collateral, (b) grant to any Person (other than the Collateral Agent), or permit any Person (other than the Collateral Agent), to retain any interest whatsoever in the Collateral other than Permitted Liens or (c) enter into any agreement that requires the proceeds received from any sale of Collateral to be applied to repay, redeem, defease or otherwise acquire or retire any Indebtedness of any Person, other than as permitted by the Indenture, the Notes and the Collateral Agreements. The Company shall, and shall cause each Guarantor to, at their sole cost and expense, (i) execute and deliver all such agreements and instruments as the Collateral Agent shall reasonably request to more fully or accurately describe the property intended to be Collateral or the obligations intended to be secured by the Collateral Agreements and (ii) file any such notice filings or other agreements or instruments as may be reasonably necessary or desirable under applicable law to perfect the Liens created by the Collateral Agreements at such times and at such places as the Collateral Agent may reasonably request.

Real Estate Mortgages and Filings. With respect to any fee interest in any real property (individually and collectively, the "Premises") (a) owned by the Company or a Domestic Restricted Subsidiary on the Issue Date (other than the Syracuse Facility) or (b) acquired by the Company or a Domestic Restricted Subsidiary after the Issue Date (other than real property located in the State of New York), (i) with a purchase price, or with a Fair Market Value as of the Issue Date, as applicable, greater than $500,000, and (ii) within 60 days of the Issue Date in the case of clause (a) or within 90 days of the acquisition thereof in the case of clause (b), the Company shall deliver to the Collateral Agent:

(1) as mortgagee, fully executed counterparts of Mortgages, each dated as of a date prior to the 60th day after the Issue Date or the date of acquisition of such property, as the case may be, duly executed by the Company or the applicable Domestic Restricted Subsidiary, together with evidence of the completion (or satisfactory arrangements for the completion), of all recordings and filings of such Mortgage as may be necessary to create a valid, perfected Lien, subject to Permitted Liens, against the properties purported to be covered thereby;

(2) mortgagee's title insurance policies in favor of the Collateral Agent, as mortgagee for the ratable benefit of the Collateral Agent, the Trustee and the Holders in an amount equal to 100% of the Fair Market Value of the Premises purported to be covered by the related Mortgage, insuring that title to such property is marketable and that the interests created by the Mortgage constitute valid Liens thereon free and clear of all Liens, defects and encumbrances other than Permitted Liens, and such policies shall also include, to the extent available, other customary endorsements and shall be accompanied by evidence of the payment in full of all premiums thereon; and

(3) with respect to each of the covered Premises, the most recent survey of such Premises, together with either (i) an updated survey certification in favor of the Trustee and the Collateral Agent from the applicable surveyor stating that, based on a visual inspection of the property and the knowledge of the surveyor, there has been no change in the facts depicted in the survey or (ii) an affidavit from the Company or the applicable Guarantor, as applicable, stating that there has been no change, other than, in each case, changes that do not materially adversely affect the use by the Company or Guarantor, as applicable, of such Premises for the Company or such Guarantor's business as so conducted, or intended to be conducted, at such Premises.

In the event that we or the Guarantors, as applicable, execute first-priority mortgages of the Syracuse Facility or any other existing and future owned real property in the State of New York under the Credit Agreement in the future, the Indenture provides that we must simultaneously execute second-priority mortgages of such real property in favor of the Collateral Agent for the benefit of the Holders of the Notes.

Leasehold Mortgages and Filings; Landlord Waivers. The Company and each of its Domestic Restricted Subsidiaries shall deliver Mortgages with respect to the Company's leasehold interests in the premises (the "Leased Premises") occupied by the Company or such Domestic Restricted Subsidiary pursuant to leases entered into after the Issue Date (collectively, the "Leases," and individually, a "Lease").

Prior to the effective date of any Lease, the Company and such Subsidiaries shall provide to the Trustee all of the items described in clauses (2) and (3) of "—Certain Covenants—Real Estate Mortgages and Filings" above and in addition shall use their respective reasonable commercial efforts to obtain an agreement executed by the lessor under the Lease, whereby the lessor consents to the Mortgage and waives or subordinates its landlord Lien (whether granted by the instrument creating the leasehold estate or by applicable law), if any, and which shall be entered into by the Collateral Agent.

Each of the Company and each of its Domestic Restricted Subsidiaries that is a lessee of, or becomes a lessee of, real property, is, and will be, required to use commercially reasonable efforts to deliver to the Collateral Agent a landlord waiver, substantially in the form of the exhibit form thereof to be attached to the Indenture, executed by the lessor of such real property; provided that in the case where such lease is a lease in existence on the Issue Date, the Company or its Domestic Restricted Subsidiary that is the lessee thereunder shall be required to use such commercially reasonable efforts to deliver within 90 days from the Issue Date.

Conduct of Business. The Company will not, and will not permit any of its Restricted Subsidiaries to, engage in any businesses other than Permitted Businesses.

Reports to Holders. Whether or not required by the rules and regulations of the Securities and Exchange Commission (the "SEC"), so long as any Notes are outstanding, the Company will furnish to the Trustee and, upon request, to the Holders:

(1) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in "Management's Discussion and Analysis of Financial Condition and Results of Operations," the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company, if any) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants; and

(2) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports, in each case within the time periods specified in the SEC's rules and regulations.

Notwithstanding the foregoing, the Company may satisfy such requirements prior to the effectiveness of the registration statement contemplated by the Registration Rights Agreement by filing with the SEC such registration statement, to the extent that any such registration statement contains substantially the same information as would be required to be filed by the Company if it were subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, and by providing the Trustee and Holders with such Registration Statement (and any amendments thereto) promptly following the filing thereof.

In addition, following the consummation of the Exchange Offer, whether or not required by the rules and regulations of the SEC, the Company will file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing). In addition, the Company has agreed that, prior to the consummation of the Exchange Offer, for so long as any Notes remain outstanding, it will furnish to the Holders upon their request, the information required to be delivered pursuant to Rule 144(A)(d)(4) under the Securities Act.

Payments for Consent. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture, the Notes, any Collateral Agreement or the Intercreditor Agreement unless such consideration is offered to be paid or is paid to all Holders that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Events of Default

The following events are defined in the Indenture as "Events of Default":

(1) the failure to pay interest and Additional Interest, if any, on any Notes when the same becomes due and payable and the default continues for a period of 30 days;

(2) the failure to pay the principal of or premium, if any, on any Notes, when such principal becomes due and payable, at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or a Net Proceeds Offer when such payments become due);

(3) a default in the observance or performance of any other covenant or agreement contained in the Indenture (other than the payment of the principal of, or premium, if any, or interest or Additional Interest, if any, on any Note) or any Collateral Agreement which default continues for a period of 30 days after the Company receives written notice specifying the default (and demanding that such default be remedied) from the Trustee or the Holders of at least 25% of the outstanding principal amount of the Notes (except in the case of a default with respect to the "—Certain Covenants—Merger, Consolidation and Sale of Assets" covenant, which will constitute an Event of Default with such notice requirement but without such passage of time requirement);

(4) the failure to pay at final maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness of the Company or any Restricted Subsidiary other than the Notes and Guarantees, or the acceleration of the final stated maturity of any such Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 20 days from the date of acceleration) if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at final maturity or which has been accelerated (in each case with respect to which the 20-day period described above has elapsed), aggregates $5.0 million or more at any time;

(5) one or more judgments in an aggregate amount in excess of $5.0 million shall have been rendered against the Company or any of its Restricted Subsidiaries (other than any judgment as to which a reputable and solvent third party insurer has accepted full coverage) and such judgments remain undischarged, unpaid or unstayed for a period of 60 days after such judgment or judgments become final and non-appealable;

(6) certain events of bankruptcy affecting the Company or any of its Significant Subsidiaries;

(7) any Collateral Agreement at any time for any reason shall cease to be in full force and effect in all material respects, or ceases to give the Collateral Agent the Liens, rights, powers and privileges purported to be created thereby, superior to and prior to the rights of all third Persons other than the holders of Permitted Liens and subject to no other Liens except as expressly permitted by the applicable Collateral Agreement;

(8) the Company or any of the Guarantors, directly or indirectly, contest in any manner the effectiveness, validity, binding nature or enforceability of any Collateral Agreement; or

(9) any Guarantee of a Significant Subsidiary ceases to be in full force and effect or any Guarantee of a Significant Subsidiary is declared to be null and void and unenforceable or any Guarantee of a Significant Subsidiary is found to be invalid or any Guarantor denies its liability under its Guarantee (other than by reason of release of a Guarantor in accordance with the terms of the Indenture).

If an Event of Default (other than an Event of Default specified in clause (6) above with respect to the Company) shall occur and be continuing and has not been waived, the Trustee or the Holders of at least 25% in principal amount of outstanding Notes may declare the principal of and premium, if

any, accrued interest and Additional Interest, if any, on all the Notes to be due and payable by notice in writing to the Company and the Trustee specifying the Event of Default and that it is a "notice of acceleration" (the "Acceleration Notice"), and the same shall become immediately due and payable.

If an Event of Default specified in clause (6) above with respect to the Company occurs and is continuing, then all unpaid principal of, and premium, if any, and accrued and unpaid interest and Additional Interest, if any, on all of the outstanding Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

At any time after a declaration of acceleration with respect to the Notes as described in the preceding paragraphs, the Holders of a majority in principal amount of the Notes may rescind and cancel such declaration and its consequences:

(1) if the rescission would not conflict with any judgment or decree;

(2) if all existing Events of Default have been cured or waived except nonpayment of principal, premium, if any, interest or Additional Interest, if any, that has become due solely because of the acceleration;

(3) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal and premium, if any, and Additional Interest, if any, which has become due otherwise than by such declaration of acceleration, has been paid;

(4) if the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its reasonable expenses, disbursements and its advances; and

(5) in the event of the cure or waiver of an Event of Default of the type described in clause (7) of the description above of Events of Default, the Trustee shall have received an Officers' Certificate and an Opinion of Counsel that such Event of Default has been cured or waived.

No such rescission shall affect any subsequent Default or impair any right consequent thereto.

The Holders of a majority in principal amount of the Notes may waive any existing Default or Event of Default under the Indenture, and its consequences, except a default in the payment of the principal of or premium, if any, interest or Additional Interest, if any, on any Notes.

Holders may not enforce the Indenture or the Notes except as provided in the Indenture and under the TIA. Subject to the provisions of the Indenture relating to the duties of the Trustee, the Trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of any of the Holders, unless such Holders have offered to the Trustee reasonable indemnity. Subject to the provisions of the Indenture and applicable law, the Holders of a majority in aggregate principal amount of the then outstanding Notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee.

No past, present or future director, officer, employee, incorporator, or stockholder of the Company or a Guarantor, as such, shall have any liability for any obligations of the Company or the Guarantors under the Notes, the Guarantees or the Indenture or for any claim based on, in respect of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

Under the Indenture, the Company is required to provide an Officers' Certificate to the Trustee promptly upon any Officer obtaining knowledge of any Default or Event of Default (provided that such Officers' Certificate shall be provided at least annually whether or not such Officers know of any Default or Event of Default) that has occurred and, if applicable, describe such Default or Event of Default and the status thereof.

Legal Defeasance and Covenant Defeasance

The Company may, at its option and at any time, elect to have its obligations and the obligations of the Guarantors discharged with respect to the outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, except for:

(1) the rights of Holders to receive payments in respect of the principal of, premium, if any, interest and Additional Interest, if any, on the Notes when such payments are due;

(2) the Company's obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payments;

(3) the rights, powers, trust, duties and immunities of the Trustee and the Company's obligations in connection therewith; and

(4) the Legal Defeasance provisions of the Indenture.

In addition, the Company may, at its option and at any time, elect to have the obligations of the Company released with respect to certain covenants that are described in the Indenture ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, reorganization and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the Notes.

In order to exercise either Legal Defeasance or Covenant Defeasance:

(1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders cash in U.S. dollars, non-callable U.S. government obligations, or a combination thereof, in such amounts and at such times as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, interest and Additional Interest, if any, on the Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be;

(2) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that:

(a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling; or

(b) since the date of the Indenture, there has been a change in the applicable federal income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(3) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4) no Default or Event of Default shall have occurred and be continuing on the date of such deposit pursuant to clause (1) of this paragraph (except such Default or Event of Default resulting from the failure to comply with "—Certain Covenants—Limitations on Incurrence of Additional Indebtedness" as a result of the borrowing of funds required to effect such deposit) or insofar as Defaults or Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91^st day after the date of such deposit;

(5) such Legal Defeasance or Covenant Defeasance shall not result in a breach of, or constitute a default under the Indenture or any other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;

(6) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others;

(7) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with; and

(8) the Company shall have delivered to the Trustee an Opinion of Counsel (subject to customary qualifications and exclusions) to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940.

Satisfaction and Discharge

The Indenture (and all Liens on Collateral in connection with the issuance of the Notes) will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of the Notes, as expressly provided for in the Indenture) as to all outstanding Notes when:

(1) either:

(a) all the Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation; or

(b) all Notes not theretofore delivered to the Trustee for cancellation (i) have become due and payable, (ii) will become due and payable at their stated maturity within one year or (iii) are to be called for redemption within one year under arrangements reasonably satisfactory to the Trustee, and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, interest and Additional Interest, if any, on the Notes to the date of deposit together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;

(2) the Company has paid all other sums payable under the Indenture and the Collateral Agreements by the Company; and

(3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been complied with.

Modification of the Indenture

From time to time, the Company, the Guarantors, the Trustee and, if such amendment, modification or supplement relates to any Collateral Agreement, the Collateral Agent, without the consent of the Holders, may amend, modify or supplement the Indenture, the Notes, the Guarantees and the Collateral Agreements:

(1) to cure any ambiguity, defect or inconsistency contained therein;

(2) to provide for uncertificated Notes in addition to or in place of certificated Notes;

(3) to provide for the assumption of the Company's or a Guarantor's obligations to Holders in accordance with the covenant described under "—Certain Covenants—Merger, Consolidation and Sale of Assets;"

(4) to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights of any such Holder under the Indenture, the Notes, the Guarantees or the Collateral Agreements;

(5) to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA;

(6) to allow any Subsidiary or any other Person to guarantee the Notes;

(7) to release a Guarantor as permitted by the Indenture and the relevant Guarantee; or

(8) if necessary, in connection with any addition or release of Collateral permitted under the terms of the Indenture or Collateral Agreements.

Other amendments of, modifications to and supplements to the Indenture, the Notes, the Guarantees, the Registration Rights Agreement and the Collateral Agreements may be made with the consent of the Holders of a majority in principal amount of the then outstanding Notes issued under the Indenture, except that, without the consent of each Holder affected thereby, no amendment may:

(1) reduce the amount of Notes the Holders of which must consent to an amendment, supplement or waiver of any provision of the Indenture or the Notes;

(2) reduce the rate of or change or have the effect of changing the time for payment of interest, including defaulted interest, or Additional Interest on any Notes;

(3) reduce the principal of or change or have the effect of changing the fixed maturity of any Notes, or change the date on which any Notes may be subject to redemption or reduce the redemption price therefor;

(4) make any Notes payable in money other than that stated in the Notes;

(5) make any change in provisions of the Indenture protecting the right of each Holder to receive payment of principal of, premium, if any, interest and Additional Interest, if any, on such Note on or after the due date thereof or to bring suit to enforce such payment, or permitting Holders of a majority in principal amount of Notes to waive Defaults or Events of Default;

(6) amend, change or modify in any material respect the obligation of the Company to make and consummate a Change of Control Offer after the occurrence of a Change of Control or modify any of the provisions or definitions with respect thereto;

(7) subordinate the Notes in right of payment to any other Indebtedness of the Company or any Guarantor;

(8) release any Guarantor from any of its obligations under its Guarantee or the Indenture otherwise than in accordance with the terms of the Indenture; or

(9) release all or substantially all of the Collateral otherwise than in accordance with the terms of the Indenture and the Collateral Agreements.

Governing Law

The Indenture will provide that it, the Notes and the Guarantees will be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the law, of another jurisdiction would be required thereby.

The Trustee

The Indenture will provide that, except during the continuance of an Event of Default, the Trustee will perform only such duties as are specifically set forth in the Indenture. During the existence of an Event of Default, the Trustee will exercise such rights and powers vested in it by the Indenture, and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs.

The Indenture and the provisions of the TIA contain certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payments of claims in certain cases or to realize on certain property received in respect of any such claim as security or otherwise. Subject to the TIA, the Trustee will be permitted to engage in other transactions; provided that if the Trustee acquires any conflicting interest as described in the TIA, it must eliminate such conflict or resign.

Certain Definitions

Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all such terms, as well as any other terms used herein for which no definition is provided.

"Acquired Indebtedness" means Indebtedness of a Person or any of its Subsidiaries:

(a) (i) existing at the time such Person becomes a Restricted Subsidiary or at the time it merges or consolidates with or into the Company or any of its Restricted Subsidiaries or assumed in connection with the acquisition of assets from such Person or (ii) incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary upon the consummation of the acquisition of all or substantially all of the assets or all of the Capital Stock of such Person by the Company or any of its Restricted Subsidiaries; and

(b) that is without recourse to the Company or any of its Subsidiaries or to any of their respective properties or assets other than the Person or the assets to which such Indebtedness relates.

"Administrative Agent" has the meaning set forth in the definition of the term "Credit Agreement."

"Affiliate" means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; provided, that Beneficial Ownership of 10% or more of the Voting Stock of any Person shall be deemed to be control of such Person. The terms "controlling" and "controlled" have meanings correlative of the foregoing.

"Asset Acquisition" means:

(1) an Investment by the Company or any Restricted Subsidiary in any Person (other than a Subsidiary) pursuant to which such Person becomes a Wholly Owned Subsidiary, or is merged with or into the Company or any Restricted Subsidiary, or

(2) the acquisition by the Company or any Restricted Subsidiary of the assets of any Person (other than a Subsidiary) that constitute all or substantially all of the assets of such Person or comprise any division or line of business of such Person.

"Asset Sale" means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business, consistent with past practice), assignment or other transfer of:

(1) any Capital Stock of any Restricted Subsidiary; or

(2) any other property or assets of the Company or any Restricted Subsidiary other than in the ordinary course of business, consistent with past practice;

provided, that Asset Sales shall not include:

(a) a transaction or series of related transactions for which the Company or its Restricted Subsidiaries receive aggregate consideration of less than $2.5 million;

(b) the transfer of all or substantially all of the assets of the Company as permitted under "—Certain Covenants—Merger, Consolidation and Sale of Assets;"

(c) any Restricted Payment permitted under "—Certain Covenants—Limitation on Restricted Payments," or any Permitted Investment;

(d) the sale of Cash Equivalents;

(e) the creation of a Permitted Lien (but not the sale or other disposition of the property subject to such Lien); and

(f) a transfer to the Company or to a Guarantor.

"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended, and codified as 11 U.S.C. §§ 101 et seq.

"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms "Beneficially Owns" and "Beneficially Owned" have meanings correlative to the foregoing.

"Board of Directors" means, as to any Person, the board of directors or similar governing body of such Person or any duly authorized committee thereof.

"Board Resolution" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee.

"Capital Stock" means:

(1) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock of such Person;

(2) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person; and

(3) any warrants, rights or options to purchase any of the instruments or interests referred to in clause (1) or (2) above.

"Capitalized Lease Obligation" means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP.

"Cash Equivalents" means:

(1) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof;

(2) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc. ("Moody's");

(3) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's;

(4) certificates of deposit or bankers' acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States of America or any state thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined net capital and surplus of not less than $250.0 million;

(5) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (1) above entered into with any bank meeting the qualifications specified in clause (4) above; and

(6) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (1) through (5) above.

"Change of Control" means the occurrence of one or more of the following events:

(1) any direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one transaction or a series of related transactions, of all or substantially all of the assets of the Company to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a "Group"), other than a transaction in which the transferee is controlled by one or more Permitted Holders;

(2) the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company, other than (A) a transaction in which the surviving or Transferee Person is a Person that is controlled by the Permitted Holders or (B) any such transaction where the Voting Stock of the Company outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Capital Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such

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Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance);

(3) the approval by the holders of Capital Stock of the Company of any plan or proposal for the liquidation, winding up or dissolution of the Company;

(4) prior to the first Public Equity Offering, the Permitted Holders cease for any reason to be the Beneficial Owner, directly or indirectly, in the aggregate of at least a majority of the total voting power of the Voting Stock of the Company, whether by virtue of the issuance, sale or other disposition of Capital Stock of the Company, a merger, consolidation or sale of assets involving the Company, a Restricted Subsidiary, any voting trust or other agreement; or

(5) subsequent to the first Public Equity Offering, (a) any Person or Group is or becomes the Beneficial Owner, directly or indirectly, in the aggregate of more than 35% of the total voting power of the Voting Stock of the Company, and (b) the Permitted Holders Beneficially Own, directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of the Company than such other Person or Group.

"Collateral" shall mean collateral as such term is defined in the Security Agreement, all property mortgaged under the Mortgages and any other property, whether now owned or hereafter acquired, upon which a Lien securing the Obligations is granted or purported to be granted under any Collateral Agreement.

"Collateral Agent" means the collateral agent and any successor under the Indenture.

"Collateral Agreements" means, collectively, the Intercreditor Agreement, the Security Agreement and each Mortgage, in each case, as the same may be in force from time to time.

"Common Stock" of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person's common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock.

"Consolidated EBITDA" means, for any period, the sum (without duplication) of:

(1) Consolidated Net Income; and

(2) to the extent Consolidated Net Income has been reduced thereby:

(a) all income taxes paid or accrued in accordance with GAAP for such period;

(b) Consolidated Interest Expense and interest attributable to write-offs of deferred financing costs; and

all as determined on a consolidated basis in accordance with GAAP.

"Consolidated Fixed Charge Coverage Ratio" means the ratio of Consolidated EBITDA during the four consecutive full fiscal quarters (the "Four Quarter Period") most recently ending on or prior to the date of the transaction or event giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio for which financial statements are available (the "Transaction Date") to Consolidated Fixed Charges for the Four Quarter Period.

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For purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be calculated after giving effect on a pro forma basis for the period of such calculation to:

(1) the incurrence or repayment of any Indebtedness of the Company or any of its Restricted Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to working capital facilities, occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period; and

(2) any Asset Sale or Asset Acquisition (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of the Company or one of its Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of any such Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date), as if such Asset Sale or Asset Acquisition (including the incurrence, assumption or liability for any such Indebtedness or Acquired Indebtedness and also including any Consolidated EBITDA associated with such Asset Acquisition) occurred on the first day of the Four Quarter Period.

Furthermore, in calculating "Consolidated Fixed Charges" for purposes of determining the denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage Ratio":

(1) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date (including Indebtedness actually incurred on the Transaction Date) and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date; and

(2) notwithstanding clause (1) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Interest Swap Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements.

"Consolidated Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of:

(1) Consolidated Interest Expense (excluding amortization or write-off of deferred financing costs); plus

(2) the product of (x) the amount of all dividend payments on any series of Preferred Stock of such Person (other than dividends paid in Qualified Capital Stock) paid, accrued or scheduled to be paid or accrued during such period times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local tax rate of such Person, expressed as a decimal.

"Consolidated Interest Expense" means, with respect to any Person for any period, the aggregate of the interest expense of such Person and its consolidated Subsidiaries for such period, on a consolidated basis, as determined in accordance with GAAP, and including, without duplication, (a) all amortization or accretion of original issue discount; (b) the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period; and (c) net cash costs under all Interest Swap Obligations (including amortization of fees).

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"Consolidated Net Income" means, for any period, the aggregate net income (or loss) of the Company and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided, that there shall be excluded therefrom (to the extent otherwise included therein):

(1) gains from Asset Sales and extraordinary gains, in each case together with any provision for taxes on such gains;

(2) the net income (but not loss) of any Subsidiary of the Company to the extent that the declaration of dividends or similar distributions by that Subsidiary of that income is restricted by a contract, operation of law or otherwise;

(3) the net income (but not loss) of any Person, other than the Company or a Restricted Subsidiary, except to the extent of cash dividends or distributions paid to the Company or to a Restricted Subsidiary by such Person;

(4) any restoration to income of any material contingency reserve, except to the extent that provision for such reserve was made out of Consolidated Net Income accrued at any time following the Issue Date;

(5) income or loss attributable to discontinued operations (including, without limitation, operations disposed of during such period whether or not such operations were classified as discontinued);

(6) all gains realized on or because of the purchase or other acquisition by the Company or any of its Restricted Subsidiaries of any securities of such Person or any of its Restricted Subsidiaries;

(7) the cumulative effect of a change in accounting principles; and

(8) in the case of a successor to the Company by consolidation or merger or as a transferee of the Company's assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets.

"Consolidated Non-cash Charges" means, with respect to any Person, for any period, the aggregate depreciation, amortization and other non-cash items and expenses of such Person and its consolidated Subsidiaries to the extent they reduce Consolidated Net Income of such Person for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charges constituting an extraordinary item or loss or any such charge that requires an accrual of or a reserve for cash charges for any future period).

"Credit Agreement" means the Credit Agreement, dated as of the Issue Date, among the Company and the lenders party thereto (together with their successors and assigns, the "Lenders") and Wells Fargo Foothill, Inc., as administrative agent (in such capacity, together with its successors and assigns, the "Administrative Agent"), together with the related documents thereto (including, without limitation, any guarantee agreements and security documents), or any agreement extending the maturity of, refinancing, replacing, refunding, restating or otherwise restructuring (whether upon or at any time or from time to time after termination or otherwise) all or any portion of the Indebtedness under such agreement or document or any successor or replacement agreement or document and whether by the same or any other agent, lender or group of lenders, or institutional investors, providing for revolving credit loans, term loans, letters of credit or issuance of notes or any other debt, in each of the above cases as such agreements may be amended, supplemented or otherwise modified from time to time.

"Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any Restricted Subsidiary against fluctuations in currency values.

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"Default" means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default.

"Disqualified Capital Stock" with respect to any Person means that portion of any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event (other than an event that would constitute a Change of Control), matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof (except in each case, upon the occurrence of a Change of Control) on or prior to the first anniversary of the final maturity date of the Notes for cash or is convertible into or exchangeable for debt securities of the Company or its Subsidiaries at any time prior to such anniversary.

"Domestic Restricted Subsidiary" means, with respect to any Person, a Domestic Subsidiary of such Person that is a Restricted Subsidiary of such Person.

"Domestic Subsidiary" means, with respect to any Person, a Subsidiary of such Person that is not a Foreign Subsidiary of such Person.

"Equity Offering" means an underwritten public offering of Common Stock of the Company or any holding company of the Company (including Holdings) pursuant to a registration statement filed with the SEC (other than on Form S-8) or any private placement of Common Stock of the Company or any holding company of the Company (including Holdings) to any Person other than issuances upon exercise of options by employees of any holding company, the Company or any of the Restricted Subsidiaries.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto.

"Exchange Offer" means an exchange offer that may be made by the Company, pursuant to the Registration Rights Agreement, to exchange for any and all the Notes a like aggregate principal amount of Notes having substantially identical terms to the Notes registered under the Securities Act.

"Fair Market Value" means, with respect to any asset or property, the price which could be negotiated in an arm's length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value shall be determined by the Board of Directors of the Company acting in good faith and shall be evidenced by a Board Resolution.

"Foreign Restricted Subsidiary" means any Restricted Subsidiary that is organized under the laws of any jurisdiction other than the United States of America, any state thereof or the District of Columbia.

"Foreign Subsidiary" means, with respect to any Person, any Subsidiary of such Person that is organized under the laws of any jurisdiction other than the United States of America, any state thereof or the District of Columbia.

"GAAP" means accounting principles generally accepted in the United States set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are in effect from time to time.

"Guarantor" means (1) each of the Company's Domestic Restricted Subsidiaries existing on the Issue Date and (2) each of the Company's Domestic Restricted Subsidiaries that in the future executes a supplemental indenture in which such Domestic Restricted Subsidiary agrees to be bound by the terms of the Indenture as a Guarantor; provided that any Person constituting a Guarantor as described

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above shall cease to constitute a Guarantor when its respective Guarantee is released in accordance with the terms of the Indenture.

"Holder" means the Person in whose name a Note is registered on the registrar's books.

"Holdings" means Altra Holdings, Inc.

"Indebtedness" means with respect to any Person, without duplication:

(1) all Obligations of such Person for borrowed money;

(2) all Obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(3) all Capitalized Lease Obligations of such Person;

(4) all Obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all Obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities arising in the ordinary course of business, consistent with past practice, that are not overdue by 90 days or more or are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and any deferred purchase price represented by earn outs consistent with the Company's past practice);

(5) all Obligations for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction, whether or not then due;

(6) guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (1) through (5) above and clause (8) below;

(7) all Obligations of any other Person of the type referred to in clauses (1) through (6) which are secured by any Lien on any property or asset of such Person, the amount of any such Obligation being deemed to be the lesser of the Fair Market Value of the property or asset securing such Obligation or the amount of such Obligation;

(8) all Interest Swap Obligations and all Obligations under Currency Agreements of such Person; and

(9) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any.

For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the Fair Market Value of such Disqualified Capital Stock, such Fair Market Value shall be determined reasonably and in good faith by the board of directors of the issuer of such Disqualified Capital Stock.

"Independent Financial Advisor" means a nationally-recognized accounting, appraisal or investment banking firm: (1) that does not, and whose directors, officers and employees or Affiliates do not, have a direct or indirect financial interest in the Company; and (2) that, in the judgment of the Board of Directors of the Company, is otherwise independent and qualified to perform the task for which it is to be engaged.

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"Intercreditor Agreement" means the Intercreditor Agreement among the Administrative Agent, the Trustee, the Collateral Agent, the Company and the Guarantors, dated as of the Issue Date, as the same may be amended, supplemented or modified from time to time.

"Interest Swap Obligations" means the obligations of any Person pursuant to any arrangement with any other Person, whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such other Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements.

"Investment" in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business, consistent with past practice, that are required to be recorded in accordance with GAAP as accounts receivable on the balance sheet of the lender) or other extensions of credit (including by way of guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition for value of Capital Stock, Indebtedness or other similar instruments issued by such Person. If the Company or any Restricted Subsidiary issues, sells or otherwise disposes of any Capital Stock of a Person that is a Restricted Subsidiary such that, after giving effect thereto, such Person is no longer a Restricted Subsidiary, any Investment by the Company or any Restricted Subsidiary in such Person remaining after giving effect thereto will be deemed to be a new Investment at such time. The acquisition by the Company or any Restricted Subsidiary of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Company or such Restricted Subsidiary in such third Person at such time. Except as otherwise provided for herein, the amount of an Investment shall be its fair market value at the time the Investment is made and without giving effect to subsequent changes in value.

For purposes of the definition of "Unrestricted Subsidiary," the definition of "Restricted Payment" and the covenant described under "—Certain Covenants—Limitation on Restricted Payments:"

(i) "Investment" shall include the portion (proportionate to the Company's equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary equal to an amount (if positive) equal to (A) the Company's "Investment" in such Subsidiary at the time of such redesignation less (B) the portion (proportionate to the Company's equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and

(ii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Company.

"Issue Date" means the date of original issuance of the Notes.

"Lenders" has the meaning set forth in the definition of the term "Credit Agreement."

"Lien" means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest).

"Management Agreement" means the advisory services agreement, to be dated as of the Issue Date, by and among the Company, Holdings and Genstar Capital, L.P.

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"Mortgages" means the mortgages, deeds of trust, deeds to secure Indebtedness or other similar documents securing Liens on the Premises and/or the Leased Premises, as well as the other Collateral secured by and described in the mortgages, deeds of trust, deeds to secure Indebtedness or other similar documents.

"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by the Company or any of its Restricted Subsidiaries from such Asset Sale net of:

(1) reasonable out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions);

(2) all taxes and other costs and expenses actually paid or estimated by the Company (in good faith) to be payable in cash in connection with such Asset Sale;

(3) repayment of Indebtedness that is secured by the property or assets that are the subject of such Asset Sale and is required to be repaid in connection with such Asset Sale; and

(4) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale;

provided, however, that if, after the payment of all taxes with respect to such Asset Sale, the amount of estimated taxes, if any, pursuant to clause (2) above exceeded the tax amount actually paid in cash in respect of such Asset Sale, the aggregate amount of such excess shall, at such time, constitute Net Cash Proceeds.

"Obligations" means all obligations for principal, premium, interest, Additional Interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

"Offering" means the offering of the Notes hereunder.

"Officer" means the Chief Executive Officer, the President, the Chief Financial Officer or any Vice President of the Company.

"Officers' Certificate" means a certificate signed by two Officers of the Company, at least one of whom shall be the principal financial officer of the Company, and delivered to the Trustee.

"Opinion of Counsel" means a written opinion of counsel who shall be reasonably acceptable to the Trustee.

"Permitted Business" means any business that is the same as or similar, reasonably related, complementary or incidental to the business in which the Company and its Restricted Subsidiaries are engaged on the Issue Date.

"Permitted Holders" means Genstar Capital, L.P. and its Affiliates.

"Permitted Indebtedness" means, without duplication, each of the following:

(1) Indebtedness under the Notes issued in the Offering or in the Exchange Offer, in an aggregate outstanding principal amount not to exceed $165.0 million, and the related Guarantees;

(2) Indebtedness incurred pursuant to the Credit Agreement in an aggregate principal amount at any time outstanding not to exceed $30.0 million, as such amount may be reduced from

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time to time as a result of permanent reductions of the commitments thereunder as provided in "—Certain Covenants—Limitation on Asset Sales;"

(3) other Indebtedness of the Company and its Restricted Subsidiaries outstanding on the Issue Date;

(4) Interest Swap Obligations of the Company or any Restricted Subsidiary of the Company covering Indebtedness of the Company or any of its Restricted Subsidiaries; provided, however, that such Interest Swap Obligations are entered into for the purpose of fixing or hedging interest rates with respect to any fixed or variable rate Indebtedness that is permitted by the Indenture to be outstanding to the extent that the notional amount of any such Interest Swap Obligation does not exceed the principal amount of Indebtedness to which such Interest Swap Obligation relates;

(5) Indebtedness under Currency Agreements; provided that in the case of Currency Agreements which relate to Indebtedness, such Currency Agreements do not increase the Indebtedness of the Company and its Restricted Subsidiaries outstanding other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder;

(6) Intercompany Indebtedness of the Company or a Guarantor for so long as such Indebtedness is held by the Company or a Guarantor; provided that if as of any date any other Person owns or holds any such Indebtedness or a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness under this clause (6) by the issuer of such Indebtedness;

(7) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, consistent with past practice; provided, that such Indebtedness is extinguished within three business days of incurrence;

(8) Indebtedness of the Company or any of its Restricted Subsidiaries represented by letters of credit for the account of the Company or such Restricted Subsidiary, as the case may be, to provide security for workers' compensation claims, payment obligations in connection with self-insurance or similar requirements in the ordinary course of business, consistent with past practice;

(9) obligations in respect of performance, bid and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business, consistent with past practice;

(10) Indebtedness represented by Capitalized Lease Obligations and Purchase Money Indebtedness incurred in the ordinary course of business, consistent with past practice (including Refinancings thereof that do not result in an increase in the aggregate principal amount of Indebtedness of such Person as of the date of such proposed Refinancing (plus the amount of any premium required to be paid under the terms of the instrument governing such Indebtedness and plus the amount of reasonable expenses incurred by the Company in connection with such Refinancing)) not to exceed $5.0 million at any time outstanding;

(11) Refinancing Indebtedness;

(12) Indebtedness represented by guarantees by the Company or a Restricted Subsidiary of Indebtedness incurred by the Company or a Restricted Subsidiary so long as the incurrence of such Indebtedness by the Company or any such Restricted Subsidiary is otherwise permitted by the terms of the Indenture;

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(13) Indebtedness of the Company or any of its Restricted Subsidiaries to the extent the net proceeds thereof are promptly used to redeem the Notes in full or deposited to defease or discharge the Notes, in each case, in accordance with the Indenture; and

(14) additional Indebtedness of the Company and its Restricted Subsidiaries in an aggregate principal amount not to exceed $15.0 million at any time outstanding.

For purposes of determining compliance with the "—Certain Covenants—Limitation on Incurrence of Additional Indebtedness" covenant, (a) the outstanding principal amount of any item of Indebtedness shall be counted only once and (b) in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (1) through (14) above or is entitled to be incurred pursuant to the Consolidated Fixed Charge Coverage Ratio provisions of such covenant, the Company shall, in its sole discretion, classify (or later reclassify) such item of Indebtedness in any manner that complies with this covenant.

"Permitted Investments" means:

(1) Investments in any Person that is or will become immediately after such Investment a Guarantor or that will merge or consolidate with or into the Company or a Guarantor, or that transfers or conveys all or substantially all of its assets to the Company or a Guarantor;

(2) Investments in the Company by any Restricted Subsidiary; provided that any Indebtedness evidencing such Investment is unsecured and subordinated, pursuant to a written agreement, to the Company's Obligations under the Notes and the Indenture;

(3) Investments in cash and Cash Equivalents;

(4) Currency Agreements and Interest Swap Obligations entered into in the ordinary course of the Company's or its Restricted Subsidiaries' businesses, consistent with past practice, and otherwise in compliance with the Indenture;

(5) Investments in the Notes and Exchange Notes;

(6) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers in exchange for claims against such trade creditors or customers;

(7) Investments as a result of non-cash consideration received in connection with an Asset Sale made in compliance with the "—Certain Covenants—Limitation on Asset Sales" covenant;

(8) Investments in existence on the Issue Date;

(9) loans and advances, including advances for travel and moving expenses, to employees, officers and directors of the Company and its Restricted Subsidiaries in the ordinary course of business, consistent with past practice, for bona fide business purposes and in accordance with applicable laws not in excess of $500,000 at any one time outstanding; and

(10) advances to suppliers and customers in the ordinary course of business, consistent with past practice.

"Permitted Liens" means the following types of Liens:

(1) Liens (other than Liens arising under ERISA) for taxes, assessments or governmental charges or claims either (a) not delinquent or (b) contested in good faith by appropriate proceedings and as to which the Company or its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP;

(2) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law or pursuant to customary reservations or

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retentions of title incurred in the ordinary course of business, consistent with past practice, for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof;

(3) Liens incurred or deposits made in the ordinary course of business, consistent with past practice, in connection with workers' compensation, unemployment insurance and other types of social security, including any Lien securing letters of credit issued in the ordinary course of business, consistent with past practice, in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);

(4) easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of real property not interfering in any material respect with the ordinary conduct of the business, consistent with past practice, of the Company or any of its Restricted Subsidiaries;

(5) any interest or title of a lessor under any Capitalized Lease Obligation permitted pursuant to clause (10) of the definition of "Permitted Indebtedness;" provided that such Liens do not extend to any property or assets which is not leased property subject to such Capitalized Lease Obligation;

(6) Liens securing Purchase Money Indebtedness permitted pursuant to clause (10) of the definition of "Permitted Indebtedness;" provided, that (a) the Indebtedness shall not exceed the cost of the property or assets acquired, together, in the case of real property, with the cost of the construction thereof and improvements thereto, and shall not be secured by a Lien on any property or assets of the Company or any Restricted Subsidiary other than such property or assets so acquired or constructed and improvements thereto and (b) the Lien securing such Indebtedness shall be created within 180 days of such acquisition or construction or, in the case of a refinancing of any Purchase Money Indebtedness, within 180 days of such refinancing;

(7) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(8) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof;

(9) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off;

(10) Liens securing Interest Swap Obligations that relate to Indebtedness that is otherwise permitted under the Indenture;

(11) Liens securing Indebtedness under Currency Agreements that are permitted under the Indenture;

(12) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within such proceedings may be initiated shall not have expired;

(13) Liens securing Acquired Indebtedness incurred in accordance with the "—Certain Covenants—Limitation on Incurrence of Additional Indebtedness" covenant; provided, that such Liens

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do not extend to or cover any property or assets of the Company or of any of its Restricted Subsidiaries other than the property or assets that secure the Acquired Indebtedness;

(14) Liens securing the Notes and all other monetary obligations under the Indenture and the Guarantees;

(15) Liens securing Indebtedness under the Credit Agreement to the extent such Indebtedness is permitted under clause (2) of the definition of the term "Permitted Indebtedness;" and

(16) Liens securing Refinancing Indebtedness incurred to Refinance any Indebtedness secured by a Lien permitted under this paragraph and incurred in accordance with the "—Certain Covenants—Limitation on Incurrence of Additional Indebtedness" provisions of the Indenture; provided, that such Liens: (i) are no less favorable to the Holders and are not more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being Refinanced; and (ii) do not extend to or cover any property or assets of the Company or any of its Restricted Subsidiaries not securing the Indebtedness so Refinanced.

"Person" means an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof.

"Preferred Stock" of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation.

"Public Equity Offering" means an underwritten public offering of Common Stock of the Company or any holding company of the Company pursuant to a registration statement filed with the SEC (other than on Form S-8).

"Purchase Money Indebtedness" means Indebtedness of the Company and its Restricted Subsidiaries incurred for the purpose of financing all or any part of the purchase price, or the cost of installation, construction or improvement, of property or equipment, provided, that the aggregate principal amount of such Indebtedness does not exceed the lesser of the Fair Market Value of such property or such purchase price or cost.

"Qualified Capital Stock" means any Capital Stock that is not Disqualified Capital Stock.

"Refinance" means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have correlative meanings.

"Refinancing Indebtedness" means any Refinancing by the Company or any Restricted Subsidiary of Indebtedness incurred in accordance with the "—Certain Covenants—Limitation on Incurrence of Additional Indebtedness" covenant (other than pursuant to Permitted Indebtedness) or clauses (1), (3) or (11) of the definition of Permitted Indebtedness, in each case that does not:

(1) have an aggregate principal amount (or, if such Indebtedness is issued with original issue discount, an aggregate offering price) greater than the sum of (x) the aggregate principal amount of the Indebtedness being Refinanced (or, if such Indebtedness being Refinanced is issued with original issue discount, the aggregate accreted value) as of the date of such proposed Refinancing plus (y) the amount of fees, expenses, premium, defeasance costs and accrued but unpaid interest relating to the Refinancing of such Indebtedness being Refinanced;

(2) create Indebtedness with: (a) a Weighted Average Life to Maturity that is less than the Weighted Average Life to Maturity of the Indebtedness being Refinanced; or (b) a final maturity earlier than the final maturity of the Indebtedness being Refinanced; or

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(3) affect the security, if any, for such Refinancing Indebtedness (except to the extent that less security is granted to holders of such Refinancing Indebtedness);

If such Indebtedness being Refinanced is subordinate or junior by its terms to the Notes, then such Refinancing Indebtedness shall be subordinate by its terms to the Notes at least to the same extent and in the same manner as the Indebtedness being Refinanced.

"Registration Rights Agreement" means the Registration Rights Agreement, dated as of the Issue Date, between the Company, the Guarantors and the Initial Purchaser, as the same may be amended or modified from time to time in accordance with the terms thereof.

"Restricted Subsidiary" means any Subsidiary of the Company which at the time of determination is not an Unrestricted Subsidiary.

"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

"Security Agreement" means the Security Agreement, dated as of the Issue Date, made by the Company and the Guarantors in favor of the Collateral Agent, as amended or supplemented from time to time in accordance with its terms.

"Significant Subsidiary" with respect to any Person, means any Restricted Subsidiary of such Person that satisfies the criteria for a "significant subsidiary" set forth in Rule 1-02(w) of Regulation S-X under the Exchange Act.

"Subsidiary" with respect to any Person, means:

(1) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person; or

(2) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person.

"Syracuse Facility" means the facility of the Company located at 1728 Burnet Avenue, Syracuse, Onondago County, New York.

"Unrestricted Subsidiary" means:

(1) any Subsidiary of the Company that at the time of determination shall be or continue to be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below; and

(2) any Subsidiary of an Unrestricted Subsidiary.

The Board of Directors may designate any Subsidiary (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated, provided that:

(1) the Company certifies to the Trustee that such designation complies with the "—Certain Covenants—Limitation on Restricted Payments" covenant; and

(2) each Subsidiary to be so designated and each of its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries.

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The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if:

(1) immediately after giving effect to such designation, the Company is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the "—Certain Covenants—Limitation on Incurrence of Additional Indebtedness" covenant; and

(2) immediately before and immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing.

Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions.

"Voting Stock" means, with respect to any Person, securities of any class or classes of Capital Stock of such Person entitling the holders thereof (whether at all times or only so long as no senior class of stock has voting power by reason of any contingency) to vote in the election of members of the Board of Directors (or equivalent governing body) of such Person.

"Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (1) the then outstanding aggregate principal amount of such Indebtedness into (2) the sum of the total of the products obtained by multiplying:

(a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by

(b) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment.

"Wholly Owned Subsidiary" means any Guarantor of which all the outstanding Capital Stock (other than directors' qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to applicable law) are owned by the Company or any other Wholly Owned Subsidiary.

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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the material U.S. federal income tax consequences relating to the exchange of old notes for registered notes in the exchange offer. This discussion is a general summary only and does not address all tax aspects relating to the exchange. This discussion deals only with the U.S. federal income tax consequences to persons who hold such notes as capital assets and does not deal with the consequences to special classes of holders of the notes, such as dealers in securities or currencies, brokers, traders that mark-to-market their securities, insurance companies, tax-exempt entities, financial institutions or "financial services entities," persons with a functional currency other than the U.S. dollar, regulated investment companies, real estate investment trusts, retirement plans, expatriates or former long-term residents of the United States, persons who hold their notes as part of a straddle, hedge, "conversion transaction," "constructive sale" or other integrated investment, persons subject to the alternative minimum tax, partnerships or other pass-through entities or investors in partnerships or other pass-through entities that hold the notes. The discussion is based upon the Internal Revenue Code of 1986, as amended, which we refer to as the Code, and the Treasury Regulations promulgated thereunder, and rulings and judicial interpretations thereof, all as in effect on the date of this prospectus, any of which may be repealed or subject to change, possibly with retroactive effect.

Consequences of Tendering Old Notes

The exchange of old notes for registered notes (with substantially identical terms) in the exchange offer will not be a taxable event for U.S. federal income tax purposes, and a holder will have the same adjusted tax basis and holding period in such registered notes that the holder had in the old notes immediately before the exchange. The U.S. federal income tax consequences of holding and disposing of such registered notes will be the same as those applicable to the old notes.

THE PRECEDING DISCUSSION OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OF OLD NOTES FOR REGISTERED NOTES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR AS TO PARTICULAR TAX CONSEQUENCES TO IT RELATING TO THE EXCHANGE, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE LAW.

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PLAN OF DISTRIBUTION

Any broker-dealer who holds old notes that were acquired for its own account as a result of market-making activities or other trading activities (other than old notes acquired directly from the issuer), may exchange such old notes pursuant to the exchange offer; however, such broker-dealer may be deemed to be an "underwriter" within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the registered notes received by such broker-dealer in the exchange offer, which prospectus delivery requirement may be satisfied by the delivery of such broker-dealer of this prospectus. We have agreed that, for a period ending on the earlier of (a) 180 days after the registration statement containing this prospectus is declared effective and (b) the date on which a broker-dealer is no longer required to deliver a prospectus in connection with market-making or other trading activities, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until , 2005, all dealers effecting transactions in the registered notes may be required to deliver a prospectus.

We will not receive any proceeds from any sale of registered notes by broker-dealers. Registered notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over the counter market, in negotiated transactions, through the writing of options on the registered notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such registered notes. Any broker-dealer that resells registered notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such registered notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of registered notes and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.

We will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer (including the expenses of one counsel for the holders of the notes) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

115

LEGAL MATTERS

Weil, Gotshal & Manges LLP, New York, New York has passed upon the validity of the registered notes and the related guarantees on our behalf.

EXPERTS

Ernst & Young LLP, independent registered public accounting firm, has audited our consolidated financial statements at December 31, 2004 and for the period from inception (December 1, 2004) through December 31, 2004, and the consolidated financial statements of the Predecessor at December 31, 2003, for the period from January 1, 2004 through November 30, 2004 and for each of the two years in the period ended December 31, 2003, as set forth in their report. We have included our consolidated financial statements in the registration statement in reliance on Ernst & Young LLP's report, given on their authority as experts in accounting and auditing.

Firley, Moran, Freer & Eassa, P.C., independent auditors, have audited the combined financial statements of Kilian Manufacturing Corporation and Kilian Canada ULC as of October 22, 2004 and December 27, 2003 and for the periods from December 28, 2003 through October 22, 2004; February 15, 2003 through December 27, 2003 and December 29, 2002 through February 14, 2003. Such financial statements are included in this registration statement in reliance on the report of Firley, Moran, Freer & Eassa, P.C. given on their authority as experts in accounting and auditing.

AVAILABLE INFORMATION

We have filed with the Securities and Exchange Commission a registration statement on Form S-4 under the Securities Act with respect to the registered notes. This prospectus, which is a part of the registration statement, omits certain information included in the registration statement and the exhibits thereto. For further information with respect to us and the securities, we refer you to the registration statement and its exhibits. The descriptions of each contract and document contained in this prospectus are summaries and qualified in their entirety by reference to the copy of each such contract or document filed as an exhibit to the registration statement. You may read and copy any document we file or furnish with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, DC 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 450 Fifth Street, NW, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room. In addition, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. You can review our SEC filings, including the registration statement by accessing the SEC's Internet site at http://www.sec.gov.

Upon completion of the exchange offer, we will be subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith, will file reports with the SEC. You may inspect and copy these reports and other information at the address set forth above. You may request copies of the documents, at no cost, by telephone at (617) 328-3300 or by mail to Altra Industrial Motion, Inc., 14 Hayward Street, Quincy, Massachusetts 02171.

116

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

			Page
Altra Industrial Motion, Inc. (the "Company")
	Audited Financial Statements:
		Report of Independent Registered Public Accounting Firm	F-2
		Consolidated Balance Sheets—as of December 31, 2004 and, for the Predecessor, as of December 31, 2003	F-3
		Consolidated Statements of Operations and Comprehensive Income (Loss)—for the period from Inception (December 1, 2004) through December 31, 2004, and for the Predecessor for the eleven months ended November 30, 2004 and years ended December 31, 2003 and 2002	F-4
		Consolidated Statements of Stockholder's Equity—for the period from Inception (December 1, 2004) through December 31, 2004 and for the Predecessor for the eleven months ended November 30, 2004 and years ended December 31, 2003 and 2002	F-5
		Consolidated Statements of Cash Flows—for the period from Inception (December 1, 2004) through December 31, 2004 and for the Predecessor for the eleven months ended November 30, 2004 and years ended December 31, 2003 and 2002	F-6
		Notes to Consolidated Financial Statements	F-7
Kilian Manufacturing Corporation and Kilian Canada ULC ("Kilian")
	Audited Financial Statements:
		Independent Auditor's Report	F-47
		Combined Balance Sheets—as of October 22, 2004 and December 27, 2003	F-48
		Combined Statements of Income—for the periods from December 28, 2003 through October 22, 2004; February 15, 2003 through December 27, 2003; and December 29, 2002 through February 14, 2003	F-49
		Combined Statements of Stockholders' Equity—for the periods from December 28, 2003 through October 22, 2004; February 15, 2003 through December 27, 2003; and December 29, 2002 through February 14, 2003	F-50
		Combined Statements of Cash Flows—for the periods from December 28, 2003 through October 22, 2004; February 15, 2003 through December 27, 2003; and December 29, 2002 through February 14, 2003	F-51
		Notes to Combined Financial Statements	F-52

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors
Altra Industrial Motion, Inc.

We have audited the accompanying consolidated balance sheet of Altra Industrial Motion, Inc. ("the Company"), as of December 31, 2004, and the consolidated balance sheet of its Predecessor as of December 31, 2003, and the related consolidated statements of operations and comprehensive income (loss), changes in stockholder's equity, and cash flows for the period from inception (December 1, 2004) through December 31, 2004, and of the Predecessor for the period from January 1, 2004 through November 30, 2004, and for each of the two years in the period ended December 31, 2003. These financial statements are the responsibility of management of the Company and its Predecessor. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Altra Industrial Motion, Inc. at December 31, 2004, and of its Predecessor at December 31, 2003, and the consolidated results of the operations and cash flows of the Company for the period from inception (December 1, 2004) through December 31, 2004, and of its Predecessor for the period from January 1, 2004 through November 30, 2004, and for each of the two years in the period ended December 31, 2003, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 6, in 2002, the Predecessor changed its method of accounting for goodwill.

/s/ Ernst & Young LLP

Richmond, Virginia
April 27, 2005

F-2

ALTRA INDUSTRIAL MOTION, INC.

Consolidated Balance Sheets

Dollars in thousands

		December 31
		2004			Predecessor (Note 1) 2003
Assets
Current assets:
	Cash and cash equivalents	$	4,729		$	3,163
	Trade receivables, less allowance for doubtful accounts of $1,424 and $1,616		45,969			35,697
	Inventories, less allowance for obsolete materials of $5,650 and $5,972		57,909			44,604
	Prepaid expenses and other		7,137			4,832
	Deferred income taxes		4,180			7,518

Total current assets			119,924			95,814
Property, plant and equipment, net			68,919			62,311
Intangible assets, net			48,758			—
Goodwill			41,536			14,520
Deferred income taxes			4,923			3,083
Other assets			9,285			2,680

Total assets		$	293,345		$	178,408

Liabilities and stockholder's equity
Current liabilities:
	Accounts payable	$	28,787		$	21,108
	Accrued payroll		11,775			11,401
	Accruals and other current liabilities		14,393			10,215
	Current portion of long-term debt		913			863
	Affiliate debt		—			70,603

Total current liabilities			55,868			114,190
Long-term debt, less current portion and net of unaccreted discount			158,740			1,025
Pension liabilities			19,534			38,315
Other post retirement benefits			12,089			23,864

Total liabilities			246,231			177,394
Stockholder's equity:
	Common stock		—			—
	Additional paid-in capital		48,814			—
	Retained deficit		(1,527	)		—
	Cumulative foreign currency translation adjustment		549			4,296
	Minimum pension liability		(722	)		(37,521	)
Invested capital			—			34,239

Total stockholder's equity			47,114			1,014

Total liabilities and stockholder's equity		$	293,345		$	178,408

See accompanying notes.

F-3

ALTRA INDUSTRIAL MOTION, INC.

Consolidated Statements of Operations and Comprehensive Income (Loss)

Dollars in thousands

					Predecessor (Note 1)
		From Inception (December 1, 2004) through December 31, 2004			Predecessor (Note 1)
		From Inception (December 1, 2004) through December 31, 2004			11 Months ended November 30, 2004			Year-ended December 31, 2003			Year-ended December 31, 2002
Net sales		$	28,726		$	275,239		$	266,765		$	253,217
Cost of sales			24,051			210,527			208,264			190,538

Gross profit			4,675			64,712			58,501			62,679
Selling, general and administrative expenses			4,717			45,474			49,435			48,303
Research and development expenses			283			2,952			2,673			3,103
Restructuring charge, asset impairment and transition expenses			—			947			11,085			27,825

Income (loss) from operations			(325	)		15,339			(4,692	)		(16,552	)
Interest expense			1,450			4,294			5,368			5,489
Loss (gain) on sale of assets and other non-operating expense (income)			—			(1,152	)		465			(312	)

Income (loss) before income taxes, discontinued operations and cumulative effect of change in accounting principle			(1,775	)		12,197			(10,525	)		(21,729	)
Provision (benefit) for income taxes			(248	)		5,430			(1,592	)		2,455

Income (loss) before discontinued operations and cumulative effect of change in accounting principle			(1,527	)		6,767			(8,933	)		(24,184	)
Loss from operations and disposal of discontinued operations, net of income taxes			—			—			—			(700	)

Loss before cumulative effect of change in accounting principle			(1,527	)		6,767			(8,933	)		(24,884	)
Cumulative effect of change in accounting principle—goodwill impairment			—			—			—			(83,412	)

Net loss			(1,527	)		6,767			(8,933	)		(108,296	)

Other comprehensive (loss) income, net of income taxes:
	Minimum pension liability adjustment		(722	)		(6,031	)		5,418			(35,159	)
	Foreign currency translation adjustment		549			478			3,917			1,989

Other comprehensive (loss) income			(173	)		(5,553	)		9,335			(33,170	)

Comprehensive (loss) income		$	(1,700	)	$	1,214		$	402		$	(141,466	)

See accompanying notes.

F-4

ALTRA INDUSTRIAL MOTION, INC.

Consolidated Statements of Stockholder's Equity

Dollars in thousands

	Invested Capital			Accumulated Other Comprehensive Income (Loss)			Net Invested Capital
*For the Predecessor*
Balance at December 31, 2001	$	149,021		$	(9,390	)	$	139,631
Net loss		(108,296	)		—			(108,296	)
Distribution to affiliates		(6,398	)		—			(6,398	)
Other comprehensive loss, net of $4,747 tax benefit		—			(33,170	)		(33,170	)

Balance at December 31, 2002		34,327			(42,560	)		(8,233	)
Net loss		(8,933	)		—			(8,933	)
Contribution from affiliates		8,845			—			8,845
Other comprehensive income, net of $4,251 tax benefit		—			9,335			9,335

Balance at December 31, 2003		34,239			(33,225	)		1,014
Net income		6,767			—			6,767
Contribution from affiliates		8,370			—			8,370

Other comprehensive income, net of $3,697 tax benefit		—			(5,553	)		(5,553	)

Balance at November 30, 2004	$	49,376		$	(38,778	)	$	10,598

	Common Stock		Additional Paid-In Capital		Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Total
*For the Company*
Initial capital contribution	$	—	$	39,994	$	—		$	—		$	39,994
Common stock issuance related to acquisition		—		8,820		—			—			8,820
Net loss		—		—		(1,527	)					(1,527	)
Other comprehensive loss		—		—		—			(173	)		(173	)

Balance at December 31, 2004	$	—	$	48,814	$	(1,527	)	$	(173	)	$	47,114

See accompanying notes.

F-5

ALTRA INDUSTRIAL MOTION, INC.

Consolidated Statements of Cash Flows

Dollars in thousands


							Predecessor (Note 1)
				From Inception (December 1, 2004) through December 31, 2004			11 Months ended November 30, 2004			Year-ended December 31, 2003			Year-ended December 31, 2002
Cash flows from operating activities:
	Net income (loss)			$	(1,527	)	$	6,767		$	(8,933	)	$	(108,296	)
	Adjustments to reconcile net income (loss) to cash provided by operating activities:
		Depreciation			681			6,193			8,438			9,633
		Amortization of intangible assets			246			—			—			—
		Amortization and write-off of deferred loan costs			89			—			587			405
		Accretion of debt discount			79			—			—			—
		Amortization of inventory fair value adjustment			1,699			—			—			—
		Cumulative effect of change in accounting principle—goodwill impairment			—			—			—			83,412
		Impairments, (gains) loss on fixed assets			—			(1,300	)		2,126			18,109
		Provision (benefit) for deferred taxes			(1,031	)		117			(2,679	)		2,067
		Changes in operating assets and liabilities:
			Trade receivables		(324	)		(4,197	)		(578	)		2,851
			Inventories		(412	)		(6,755	)		(2,378	)		(785	)
			Accounts payable and accrued liabilities		9,590			3,632			(13,776	)		15,254
			Other current assets and liabilities		(2,126	)		1,477			(523	)		(1,039	)
			Other operating assets and liabilities		(335	)		(2,778	)		967			(1,742	)

Net cash provided by (used in) continuing operating activities					6,629			3,156			(16,749	)		19,869
Net cash provided by discontinued operating activities					—			—			—			2,065

Net cash provided by (used in) operating activities					6,629			3,156			(16,749	)		21,934
Cash flows from investing activities:
	Purchases of fixed assets				(289	)		(3,489	)		(5,294	)		(5,911	)
	Acquisitions, net of $2,367 of cash acquired				(181,155	)		—			—			—
	Sale of fixed assets				—			4,442			3,721			1,326

Net cash provided by (used in) investing activities					(181,444	)		953			(1,573	)		(4,585	)
Cash flows from financing activities:
	Contributed capital				39,994			—			5,000			—
	Proceeds from issuance of senior subordinated notes				158,400			—			—			—
	Payment of debt acquired in acquisitions				(12,178	)		—			(64,242	)		(6,639	)
	Payment of debt issuance costs				(6,747	)		—			—			—
	Borrowings under revolving credit agreement				4,988			—			—			—
	Payments on revolving credit agreement				(4,988	)		—			—			—
	Change in affiliate debt				—			(14,524	)		70,603			—
	Contribution from (distribution to) affiliates				—			8,370			3,845			(6,398	)

Net cash provided by (used in) financing activities					179,469			(6,154	)		15,206			(13,037	)

Effect of exchange rates on cash					75			159			1,065			(1,804	)

Increase (decrease) in cash and cash equivalents					4,729			(1,886	)		(2,051	)		2,508
Cash and cash equivalents, beginning of period					—			3,163			5,214			2,706

Cash and cash equivalents, end of period				$	4,729		$	1,277		$	3,163		$	5,214

See accompanying notes.

F-6

ALTRA INDUSTRIAL MOTION, INC.

Notes to Consolidated Financial Statements

Dollars in thousands, unless otherwise noted

1. Description of Business and Summary of Significant Accounting Policies

Basis of Preparation and Description of Business

Headquartered in Quincy, Massachusetts, Altra Industrial Motion, Inc. ("the Company") produces, designs and distributes a wide range of mechanical power transmission products, including industrial clutches and brakes, enclosed gear drives, open gearing and couplings. The Company consists of several power transmission component manufacturers including Warner Electric, Boston Gear, Formsprag Clutch, Stieber Clutch, Ameridrives Couplings, Wichita Clutch, Nuttall Gear, Kilian and Delroyd Worm Gear. The Company designs and manufactures products that serve a variety of applications in the food and beverage, material handling, printing, paper and packaging, specialty machinery, and turf and garden industries. Primary geographic markets are in North America, Western Europe and Asia.

The Company was formed on November 30, 2004 following acquisitions of certain subsidiaries of Colfax Corporation ("Colfax") and The Kilian Company ("Kilian"), both acquisitions of which are described in detail in Note 3. The consolidated financial statements of the Company include the accounts of the Company subsequent to November 30, 2004. The financial statements of "the Predecessor" include the combined historical financial statements of the Colfax entities acquired by the Company that formerly comprised the Power Transmission Group of Colfax, a privately-held industrial manufacturing company, that are presented for comparative purposes.

The financial information included herein may not reflect the consolidated financial position, operating results, and cash flows of the Company in the future or what they would have been had the Company or Predecessor been a separate, independent entity during the periods presented. Certain administrative and corporate expenditures related to the Predecessor have not been allocated to these financial statements by Colfax, as described in Note 12.

With the exception of the Boston Gear division of the Predecessor ("Boston Gear"), all subsidiaries acquired from Colfax represent separate legal entities. Boston Gear maintained its own books and records, but historically related goodwill, retirement plans, income taxes, and a portion of the worker's compensation liability were not allocated to Boston Gear. For purposes of these statements, certain assets and liabilities of Boston Gear that are included in the Predecessor financial statements represent allocations of amounts that were previously recorded on Colfax' financial statements.

Prior to May 30, 2003, the Predecessor was a group of entities under common control. On May 30, 2003, through a series of capital contributions and exchanges of equity securities by the Predecessor's shareholders, entities that were under common ownership, became subsidiaries of Colfax. In addition, certain entities that were previously taxed at the shareholder level became taxable entities (see the discussion on income taxes below and Note 8).

The historical financial results of Kilian, which was not related to the Predecessor, are not included in the presentation of Predecessor balances in the financial statements or the accompanying footnotes.

Discontinued Operations—Predecessor

In connection with the Predecessor's adoption of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," a component of the Predecessor, Bay City Forge ("Bay City"), which

F-7

was sold in December of 2002, was classified as a discontinued operation. Bay City was sold because the Predecessor determined that it was no longer a part of its core operations. Accordingly, the financial results of Bay City, for the year ended December 31, 2002, were reported as a discontinued operation and included revenues of $3.0 million, a $0.1 million pre-tax loss from discontinued operations and a $0.6 million loss, net of income taxes, from the sale of the Bay City operation.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, the Predecessor (where noted) and their wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Fair Value of Financial Instruments

The carrying values of financial instruments, including accounts receivable, accounts payable and other accrued liabilities, approximate their fair values due to their short-term maturities. The fair value of long-term debt is estimated to approximate the carrying amount based on current interest rates for similar types of borrowings. The estimated fair values may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the financial statements. Actual results could differ from those estimates.

Foreign currency translation

Assets and liabilities of subsidiaries operating outside of the United States with a functional currency other than the U.S. dollar are translated into U.S. dollars using exchange rates at the end of the respective period. Revenues and expenses are translated at average exchange rates effective during the respective period.

Foreign currency translation adjustments are included in accumulated other comprehensive income (loss) as a separate component of invested capital or stockholder's equity. Currency translation gains (losses) are included in the results of operations in the period incurred and were not material in any of the periods presented.

Reclassification

Certain prior period amounts have been reclassified in the consolidated financial statements to conform to the current period's presentation.

Cash and Cash Equivalents

Cash and cash equivalents include all financial instruments purchased with an initial maturity of three months or less. Cash equivalents are stated at cost, which approximates fair value.

F-8

Trade Receivables

An allowance for doubtful accounts is recorded equal to estimated collection losses that will be incurred in the collection of receivables. Estimated losses are based on historical collection experience, as well as, a review by management of the status of all receivables.

Inventories

Inventories at December 31, 2004 are stated at the lower of cost or market using the first-in, first-out ("FIFO") method. The cost of inventories acquired by the Company in its acquisitions reflect their fair values at November 30, 2004 as determined by the Company based on the replacement cost of raw materials, the sales price of the finished goods less an appropriate amount representing the expected profitability from selling efforts, and for work-in-process the sales price of the finished goods less an appropriate amount representing the expected profitability from selling efforts and costs to complete.

The Company periodically reviews its quantities of inventories on hand and compares these amounts to the expected usage of each particular product or product line. The Company records as a charge to cost of sales any amounts required to reduce the carrying value of inventories to net realizable value.

The Predecessor's inventories are stated at the lower of cost or market using the FIFO method.

Property, Plant and Equipment

For the Company, property, plant, and equipment are stated at cost, which includes the estimated fair values of property, plant and equipment acquired on the date of the acquisition and, at December 31, 2004, net of accumulated depreciation incurred since November 30, 2004. For the Predecessor, property, plant, and equipment are stated at historic cost, net of accumulated depreciation.

Depreciation of property, plant, and equipment is provided using the straight-line method over the estimated useful life of the asset, as follows:

Buildings and improvements		15 to 45 years
Machinery and equipment		2 to 15 years

Improvements and replacements are capitalized to the extent that they increase the useful economic life or increase the expected economic benefit of the underlying asset. Repairs and maintenance expenditures are charged to expense as incurred.

Intangible Assets

For the Company, intangibles represent product technology and patents, tradenames and trademarks and customer relationships. Product technology and patents and customer relationships are amortized on a straight-line basis over 8 to 12 years. The tradenames and trademarks are considered indefinite-lived assets and are not being amortized. Intangibles are stated at fair value on the date of

F-9

acquisition and, at December 31, 2004, net of accumulated amortization incurred since November 30, 2004.

Goodwill

For the Company, goodwill represents the excess of the purchase price paid by the Company for the Predecessor and Kilian over the fair value of the net assets acquired in each of the acquisitions. Goodwill can be attributed to the value placed on the Company being an industry leader with a market leading position in the Power Transmission industry. The Company's leadership position in the market was achieved by developing and manufacturing innovative products and management anticipates that its leadership position and profitability will continue to expand, enhanced by cost improvement programs associated with ongoing consolidation and centralization of it operations.

For the Predecessor, goodwill represented costs in excess of the fair value of net assets purchased associated with the acquisitions of various companies.

Impairment of Goodwill and Indefinite-Lived Intangible Assets

The Company evaluates the recoverability of goodwill and indefinite-lived intangible assets annually, or more frequently if events or changes in circumstances, such as a decline in sales, earnings, or cash flows, or material adverse changes in the business climate, indicate that the carrying value of an asset might be impaired. Goodwill is considered to be impaired when the net book value of a reporting unit exceeds its estimated fair value. Fair values are established using a discounted cash flow methodology (specifically, the income approach). The determination of discounted cash flows is based on the Company's strategic plans and long-range forecasts. The revenue growth rates included in the forecasts are the Company's best estimates based on current and anticipated market conditions, and the profit margin assumptions are projected based on current and anticipated cost structures.

Because the Company is still in the process of allocating its final goodwill and intangible assets, arising from the application of purchase accounting for the Predecessor and Kilian acquisitions, and has not allocated these assets across its business units, the Company evaluated its long-lived assets at the Company level at December 31, 2004. This analysis included consideration of discounted cash flows as well as EBITDA multiples. The analysis indicated no impairment to be present.

Impairment of Long-Lived Assets Other Than Goodwill and Indefinite-Lived Intangible Assets

The Company assesses its long-lived assets other than goodwill and indefinite-lived intangible assets for impairment whenever facts and circumstances indicate that the carrying amounts may not be fully recoverable. To analyze recoverability, the Company projects undiscounted net future cash flows over the remaining lives of such assets. If these projected cash flows are less than the carrying amounts, an impairment loss would be recognized, resulting in a write-down of the assets with a corresponding charge to earnings. The impairment loss is measured based upon the difference between the carrying amounts and the fair values of the assets. Assets to be disposed of are reported at the lower of the carrying amounts or fair value less cost to sell. Management determines fair value using the discounted cash flow method or other accepted valuation techniques.

F-10

Debt Issuance Costs

Costs directly related to the issuance of debt are capitalized, included in other long-term assets and amortized using the effective interest method over the term of the related debt obligation. The net carrying value of debt issuance costs was approximately $6.7 million and $0.0 million at December 31, 2004 and 2003, respectively. Related amortization expense, included as a component of interest expense, was $0.1 million, $0.0 million, $0.6 and $0.0 million for the periods from December 1, 2004 through December 31, 2004 and January 1, 2004 through November 30, 2004 and the years ended December 31, 2003 and 2002, respectively.

Revenue Recognition

Product revenues are recognized at the time title and risk of loss pass to the customer, which generally occurs upon shipment to the customer. Service revenues are recognized as services are performed. Amounts billed for shipping and handling are recorded as revenue. Product return reserves are accrued at the time of sale based on the historical relationship between shipments and returns, and are recorded as a reduction of net sales.

Shipping and Handling Costs

Shipping and handling costs associated with sales are classified as a component of cost of sales.

Warranty Costs

Estimated expenses related to product warranties are accrued at the time products are sold to customers. Estimates are established using historical information as to the nature, frequency, and average costs of warranty claims.

Self-Insurance

Certain operations are self-insured up to pre-determined amounts above which third-party insurance applies, for medical claims, workers' compensation, vehicle insurance, product liability costs and general liability exposure. The accompanying balance sheets include reserves for the estimated costs associated with these self-insured risks, based on historic experience factors and management's estimates for known and anticipated claims. A portion of medical insurance costs are offset by charging employees a premium equivalent to group insurance rates.

Research and Development

Research and development costs are expensed as incurred and amounted to $0.3 million, $3.0 million, $2.7 million and $3.1 million in the periods from December 1, 2004 through December 31, 2004 and January 1, 2004 through November 30, 2004 and the years ended December 31, 2003 and 2002, respectively.

F-11

Advertising

Advertising costs are charged to selling, general, and administrative expenses as incurred and amounted to approximately $0.2 million, $2.0 million, in the periods from December 1, 2004 through December 31, 2004 and January 1, 2004 through November 30, 2004 and less than $3.0 million in each of the years ended December 31, 2003 and 2002.

Stock-Based Compensation

Subsequent to year-end, the Company's Board of Directors established the 2004 Equity Incentive Plan that provides for various forms of stock based compensation to officers and senior-level employees of the Company. Awards granted under the 2004 Equity Incentive Plan are for equity instruments of Altra Holdings, Inc., the Company's parent company. The Company will account for the compensation expense of this plan under the fair value method prescribed by Statement of Financial Accounting Standard (SFAS) No. 123R, "Share-Based Payment," as appropriate, based upon the nature of the awards made.

Income Taxes

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement basis and the tax basis of the Company's assets and liabilities using enacted statutory tax rates applicable to future years when the temporary differences are expected to reverse. The Company records a valuation allowance when it determines that it is more likely than not that all or a portion of a deferred tax asset will not be realized. The effect on deferred income tax assets and liabilities, of a change in tax rates, is recognized in income in the period that includes the enactment date.

Prior to various dates in mid-2003, only Boston Gear and the Predecessor's non-U.S. based subsidiaries were accounted for under this method. The remaining U.S. based Predecessor affiliates were S-corporations and/or partnerships for U.S. income tax purposes. As such, income tax obligations were the responsibility of the Predecessor's shareholders and partners for those periods. During 2003, these remaining Predecessor affiliates became subject to tax at the entity level and income taxes have been provided for since those dates. The effects of recognizing deferred tax assets and liabilities related to this change in status have been included in the provision (benefit) for income taxes for the year ended December 31, 2003. For all Predecessor periods, no taxes payable or receivable have been recorded in the Predecessor financial statements subsequent to the entities becoming taxable. The related estimated income tax payable or receivable is included as a component of the net contribution from (distribution to) affiliates as shown in the accompanying Statement of Stockholders' Equity. The U.S. based current tax expense or benefit is presented as deferred tax expense or benefit for all Predecessor periods presented, as no current tax benefits or losses accrue to the Company or its Predecessor due to utilization of consolidated net operating losses of the former owner.

2. Recent Accounting Pronouncements

In December 2003, Congress passed the Medicare Prescription Drug Improvement and Modernization Act of 2003 (the Act). The Act established a prescription drug benefit under Medicare,

F-12

known as Medicare Part D, and a federal subsidy to sponsors of retiree health care benefit plans that are at least actuarially equivalent to Medicare Part D. The Financial Accounting Standards Board (the "FASB") has issued Staff Position No. 106-2, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug Improvement and Modernization Acts of 2003," which requires that the effects of the federal subsidy be considered an actuarial gain and recognized in the same manner as other actuarial gains and losses. The Predecessor recognized reductions in pension expense of $0.3 million, in the period from January 1, 2004 through November 30, 2004, as a result of the Act.

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an amendment of ARB No. 43, Chapter 4". SFAS No. 151, which is effective for the Company beginning January 1, 2006, SFAS No. 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) so that those items are recognized as current-period charges. This statement also requires the allocation of fixed production overhead costs based on the normal capacity of the production facilities regardless of the actual use of the facility. The Company does not believe that this statement will have any material impact on the Company's financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity". SFAS No. 150 clarifies the accounting for certain financial instruments with characteristics of both liabilities and equity and requires that those instruments be classified as liabilities in statements of financial position. Previously, many of those financial instruments were classified as equity. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company and the Predecessor have no such financial instruments and, as such, the adoption of this standard did not have any effect on the financial statements included herein.

In April 2003, the FASB issued SFAS No. 149, "Amendments of Statement 133 on Derivative Instruments and Hedging Activities". SFAS No. 149 amends and clarifies accounting for derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. The Company and the Predecessor have no such derivative instruments and, as such, the adoption of this standard did not have any effect on the financial statements included herein.

Effective January 1, 2003, the Predecessor adopted SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". This Statement requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. SFAS No. 146 was to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The adoption of this standard did not have a material impact on the Predecessor's consolidated financial statements.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest Entities", expanding the guidance in Accounting Research Bulletin No. 51, "Consolidated Financial Statements",

F-13

relating to transactions involving variable interest entities. In December 2003, the FASB issued FIN No. 46 (Revised) to address certain FIN No. 46 implementation issues. The Company and its Predecessor do not have any variable interest entities and, as such, the adoption of this standard did not have any impact on the financial statements included herein.

3. Acquisitions

On November 30, 2004, the Company acquired the Predecessor for $180.0 million in cash and Kilian for an $8.8 million issuance of common stock plus the assumption of Kilian debt in the amount of approximately $12.2 million. The purchase price of both acquisitions will be adjusted following the completion of certain negotiations surrounding adjustments to the respective seller's recorded working capital at the acquisition date. In connection with the acquisition of the Predecessor, $5.0 million of the purchase price was paid to an escrow agent for the benefit of any claims that the Company may have against the seller relating to the Purchase Agreement. Additional discussion surrounding the common stock issued for the Kilian acquisition is included in Note 12.

The acquisitions have been accounted for in accordance with SFAS No. 141, "Business Combinations." As discussed in the Basis of Presentation in Note 1, the consolidated financial statements include the results of operations for the period December 1, 2004 through December 31, 2004, and those of the Predecessor for prior periods.

The Company has completed its preliminary purchase price allocations. The preliminary value of the acquired assets, assumed liabilities and identified intangibles from the acquisition of the Predecessor, as presented below, are based upon management's estimates of fair value as of the date of the acquisition. However, the goodwill and intangibles recorded in connection with the acquisition of the Predecessor have not yet been allocated across the business units acquired from the Predecessor. The Company is currently evaluating the intangibles associated with the acquisition of Kilian but has not yet completed this process. Further, and as discussed above, the final purchase price of each of the acquisitions are subject to certain purchase price adjustments which have not been finalized. The final purchase price allocations will be completed within one year of the acquisitions and are not expected to

F-14

have a material impact on the Company's financial position or results of operations. The preliminary purchase price allocations are as follows (in thousands):

		Predecessor		Kilian		Total
Total purchase price, including closing costs of approximately $3.5 million		$	183,522	$	8,864	$	192,386

Cash and cash equivalents			1,183		1,184		2,367
Trade receivables			39,399		6,096		45,495
Inventories			53,938		5,108		59,046
Deferred income taxes—current			3,736		—		3,736
Prepaid expenses and other			4,848		207		5,055
Property, plant and equipment			60,354		8,783		69,137
Intangible assets			49,004		—		49,004
Deferred income taxes—long term			4,232		104		4,336
Other assets			2,625		—		2,625

	Total assets acquired		219,319		21,482		240,801
Accounts payable, accrued payroll, and accruals and other current liabilities			42,240		3,125		45,365
Bank debt			—		12,178		12,178
Pensions, other post retirement benefits and other liabilities			32,408		—		32,408

	Total liabilities assumed		74,648		15,303		89,951

	Net assets acquired		144,671		6,179		150,850

Excess purchase price over the fair value of net assets acquired		$	38,851	$	2,685	$	41,536

The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill.

The amounts recorded as intangible assets consist of the following:

		Predecessor		Kilian		Total
Customer relationships		$	27,802	$	—	$	27,802
Product technology and patents			5,122		—		5,122

	Total intangible assets subject to amortization		32,924		—		32,924
Trade names and trademarks, not subject to amortization			16,080		—		16,080

Total intangible assets		$	49,004	$	—	$	49,004

Customer relationships, product technology and patents, are subject to amortization over their estimated useful lives of twelve and eight years, respectively, which reflects the anticipated periods over which the Company estimates it will benefit from the acquired assets. The weighted average estimated useful life of all intangible assets subject to amortization is approximately 11.1 years. Substantially all of this amortization is deductible for income tax purposes. The Company is considering its options relative to the deductibility of goodwill and is unable at this time to determine what, if any, will be deductible for income tax purposes.

F-15

The following table sets forth the unaudited pro forma results of operations of the Company for the two years in the period ended December 31, 2004 as if the Company had acquired the Predecessor and Kilian as of January 1, 2003. The pro forma information contains the actual combined operating results of the Company, the Predecessor and Kilian with the results prior to the December 1, 2004 adjusted to include the pro forma impact of (i) additional amortization and depreciation expense associated with the adjustment to and recognition of fair value of fixed and intangible assets; (ii) the elimination of additional expense as a result of the fair value adjustment to inventory recorded in connection with the Acquisition; (iii) additional expenses associated with new contractual commitments created at Inception; (iv) additional expenses associated with general and administrative services previously performed by the Predecessor's parent and not charged to the Predecessor; (v) additional interest expense associated with debt issued at Inception; (vi) the elimination of previously incurred interest expense of the Predecessor and Kilian; and (vii) the elimination of expense associated with pension and OPEB obligations retained by the Predecessor. These pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisitions occurred as of January 1, 2003 or that may be obtained in the future.

(Pro forma, unaudited, in thousands)		2004			2003
Total Revenues		$	343,308		$	305,513
Net income (loss)			528			(17,333	)

4. Inventories

Inventories at December 31, 2004 and 2003 consisted of the following:


	2004			Predecessor (Note 1) 2003
Raw materials	$	29,219		$	27,464
Work in process		12,636			6,961
Finished goods		21,704			16,151

		63,559			50,576
Less—Allowance for excess, slow-moving and obsolete inventory		(5,650	)		(5,972	)

	$	57,909		$	44,604

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5. Property, Plant and Equipment

Property, plant and equipment at December 31, 2004 and 2003, consisted of the following:


	2004			Predecessor (Note 1) 2003
Land	$	5,848		$	2,486
Buildings and improvements		14,597			17,372
Machinery and equipment		49,155			82,440

		69,600			102,298
Less—Accumulated depreciation		(681	)		(39,987	)

	$	68,919		$	62,311

6. Goodwill and Intangible Assets

Goodwill and other intangibles as of December 31, 2004 and 2003 consisted of the following (in thousands):


		December 31, 2004				Predecessor (Note 1) December 31, 2003
		Cost		Accumulated Amortization		Cost		Accumulated Amortization
Intangible assets not subject to amortization:
	Goodwill	$	41,536	$	—	$	15,180	$	660
	Tradenames and trademarks		16,080		—		—		—
Intangible assets subject to amortization:
	Customer relationships		27,802		193		—		—
	Product technology and patents		5,122		53		—		—

Total intangible assets		$	90,540	$	246	$	15,180	$	660

The estimated amortization expense for intangible assets is approximately $3.0 million in each of the next five years.

Predecessor Impairment

Effective January 1, 2002, the Predecessor adopted SFAS No. 142, Goodwill and Other Intangible Assets. This statement established a new accounting standard for goodwill and certain other indefinite-lived intangible assets and established a new method of testing those assets for impairment at the reporting-unit level using a fair-value-based approach. A reporting unit is defined as an operating segment or one level below an operating segment.

At December 30, 2001 (prior to adoption), the Predecessor had net goodwill of $95.0 million. The goodwill was evaluated for impairment by reporting unit, using historical and projected EBITDA, multiplied by industry enterprise valuation multiples, to estimate their fair value. This resulted in an impairment loss of $83.4 million, which was attributable to Nuttall Gear, Industrial Clutch, Boston

F-17

Gear, the Heavy Duty Clutch business, the Electronic Clutch Brake business, and the International Distribution business. This impairment loss is included as a cumulative effect of change in accounting principle in the Predecessor's 2002 financial statements.

7. Warranty Costs

Changes in the carrying amount of accrued product warranty costs are as follows:


	December 1, 2004 through December 31, 2004			Predecessor 11 Months ended November 30, 2004			Predecessor Year-ended December 31, 2003
Balance at beginning of period	$	1,524		$	1,300		$	1,800
Accrued warranty costs		94			1,093			1,078
Payments and adjustments		(90	)		(869	)		(1,578	)

Balance at end of period	$	1,528		$	1,524		$	1,300

8. Income Taxes

The components of the provision (benefit) for income taxes were as follows:


					Predecessor (Note 1)
		December 1, 2004 through December 31, 2004			11 Months ended November 30, 2004	Year-ended December 31, 2003			Year-ended December 31, 2002
Current:
	Federal	$	—		3,749	$	500		$	—
	Foreign and State		783		1,564		587			388

			783		5,313		1,087			388
Deferred:
	Federal		(564	)	98		(1,707	)		1,991
	Foreign and state		(467	)	19		(972	)		76

			(1,031	)	117		(2,679	)		2,067

Provision (benefit) for income taxes			(248	)	5,430	$	(1,592	)	$	2,455

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax

F-18

purposes. Significant components of the deferred tax assets and liabilities as of December 31, 2004 and 2003 were as follows:

		2004					Predecessor (Note 1) 2003
		Current		Long-Term			Current			Long-Term
Deferred tax assets:
Post-retirement obligations		—		$	11,820		$	275		$	20,191
	Expenses not currently deductible	7,712						11,942			6,332
	Net operating loss carryover	388			431			—			1,930
Other		—			36			108			—

Total deferred tax assets		8,100			12,287			12,325			28,453
Valuation allowance for deferred tax assets		(2,583	)		(3,038	)		(4,807	)		(13,027	)

Net deferred tax assets		5,517			9,249			7,518			15,426
Deferred tax liabilities:
	Tax over book depreciation	—			4,326			—			11,352
	Other	1,337			—			—			991

Total deferred tax liabilities		1,337			4,326			—			12,343

Net deferred tax assets		4,180			4,923		$	7,518		$	3,083

Valuation allowances are established for a deferred tax asset that management believes may not be realized. The Company continually reviews the adequacy of the valuation allowance and recognizes tax benefits only as reassessments indicate that it is more likely than not the benefits will be realized. Prior to December 1, 2004, this assessment was made in conjunction with the annual assessment for the Predecessor. A portion of the valuation allowance of Colfax was allocated to the Predecessor based upon the relative profitability of the Predecessor to Colfax in total and this allowance was allocated among related asset categories including comprehensive income.

The Company's current portion of net operating loss carryforwards primarily relates to U.S. based entities, and expires in 2024. The long-term portion of net operating loss carryfowards relates to the Company's operations in France, and has an indefinite carryforward period.

F-19

8. Income Taxes (continued)

U.S. income taxes at the statutory tax rate reconciled to the overall U.S. and foreign provision (benefit) for income taxes were as follows:


				Predecessor (Note 1)
	From Inception (December 1, 2004) through December 31, 2004			Predecessor (Note 1)
	From Inception (December 1, 2004) through December 31, 2004			11 Months ended November 30, 2004		Year-ended December 31, 2003			Year-ended December 31, 2002
Tax at U.S. federal income tax rate	$	(621	)	4,269		$	(3,683	)	$	(7,605	)
State taxes, net of federal income tax effect		(67	)	366			(209	)		79
Meals and Entertainment		2		102			36			42
Effect of losses of domestic S corporation and partnership entities		—		—			(5,927	)		7,750
Valuation allowance		511		895			7,153			2,191
Foreign and other		(73	)	(202	)		1,038			(2	)

Provision (benefit) for income taxes		(248	)	5,430		$	(1,592	)	$	2,455

As of December 31, 2004, the Company has not recorded U.S. federal deferred income taxes on undistributed earnings from its foreign subsidiaries. It is expected that these earnings will be permanently reinvested in operations outside the U.S. It is not practical to compute the estimated deferred tax liability on these earnings. During the period from December 1, 2004 through December 31, 2004, income tax benefits were reduced by valuation allowances recorded for foreign tax credits of approximately $0.2 million and U.S. net operating loss benefits of approximately $0.3 million. During the period from January 1, 2004 through November 30, 2004, income tax benefits were reduced by valuation allowances for foreign tax credits of approximately $0.9 million.

The American Jobs Creation Act of 2004 (the "Job Creation Act") was enacted on October 22, 2004. Among other things, the Job Creation Act repeals an export incentive and creates a new deduction for qualified domestic manufacturing activities. The Company is in the process of evaluating the potential impact of this legislation.

9. Pension and Other Employee Benefits

Defined Benefit (Pension) and Postretirement Benefit Plans

The Company sponsors various defined benefit (pension) and postretirement (medical and life insurance coverage) plans for certain, primarily unionized, active employees (those in the employment of the Company at or hired since November 30, 2004). The Predecessor sponsored similar plans that covered certain employees, former employees and eligible dependents. At November 30, 2004, the Company assumed the pension and postretirement benefit obligations of all active U.S. employees and all non-U.S. employees of the Predecessor. Additionally, the Company assumed all post-employment and post-retirement welfare benefit obligations with respect to active U.S. employees. Colfax retained all other pension and postretirement benefit obligations relating to the Predecessor's former employees.

The accounting for these plans is subject to the guidance provided in SFAS No. 87, "Employers' Accounting for Pensions," and SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other

F-20

than Pensions." Both of these statements require management to make assumptions relating to the long-term rate of return on plan assets, discount rates used to measure future obligations and expenses, salary scale inflation rates, health care cost trend rates, and other assumptions. The selection of assumptions is based upon historical trends and known economic and market conditions at the time of valuation. Because of the volatility of the assumptions, actual results may vary substantially from forecast plan assumptions. Both the pension plans and the postretirement plans are revalued annually, using a December 31 measurement date, based upon updated assumptions and information about the individuals covered by the plan.

F-21

9. Pension and Other Employee Benefits (continued)

The following tables represent the reconciliation of the benefit obligation, fair value of plan assets and funded status of the respective defined benefit (pension) and postretirement benefit plans as of December 31, 2004 and 2003:


		Pension Benefits									Postretirement Benefits
		From Inception (December 1, 2004) through December 31, 2004			Predecessor (Note 1)						From Inception (December 1, 2004) through December 31, 2004			Predecessor (Note 1)
		From Inception (December 1, 2004) through December 31, 2004			11 Months ended November 30, 2004			Year-ended December 31, 2003			From Inception (December 1, 2004) through December 31, 2004			11 Months ended November 30, 2004			Year-ended December 31, 2003
Change in benefit obligation:
Obligation at beginning of period		$	—		$	149,338		$	138,689		$	—		$	30,903		$	32,072
	Benefit obligation assumed from Predecessor		23,750			—			—			12,040			—			—
	Service cost		35			530			650			30			269			390
	Interest cost		112			8,352			9,211			59			1,654			1,876
	Amendments		—			440			493			—			—			—
	Actuarial loss (gain)		687			6,757			10,722			441			(2,199	)		(1,254	)
	Foreign exchange effect		144			125			470			—			—			—
	Benefits paid		(22	)		(10,541	)		(10,897	)		—			(1,651	)		(2,181	)

Obligation at end of period		$	24,706		$	155,001		$	149,338		$	12,570		$	28,976		$	30,903

Change in plan assets:
	Fair value of plan assets, beginning of period	$	—		$	111,287		$	99,544		$	—		$	—		$	—
	Plan assets transferred from Predecessor		4,647			—			—			—			—			—
	Actual return on plan assets		—			3,979			21,881			—			—			—
	Employer contribution		22			5,055			759			—			1,651			2,181
Benefits paid			(22	)		(10,541	)		(10,897	)		—			(1,651	)		(2,181	)

Fair value of plan assets, end of period		$	4,647		$	109,780		$	111,287		$	—		$	—		$	—

Funded status:
Plan assets less than benefit obligation		$	(20,059	)	$	(45,221	)	$	(38,051	)	$	(12,570	)	$	(28,976	)	$	(30,903	)
Unrecognized actuarial loss			722			58,494			48,833			367			1,666			4,478
Unrecognized prior service cost			—			223			123			—			(28	)		56

(Accrued) prepaid cost		$	(19,337	)	$	13,496		$	10,905		$	(12,203	)	$	(27,338	)	$	(26,369	)

Amounts recognized in the combined balance sheets consist of:
Accrued benefit cost		$	(20,059	)	$	(45,343	)	$	(38,315	)	$	(12,203	)	$	(27,338	)	$	(26,369	)
Intangible asset			—			223			332			—			—			—
Accumulated other comprehensive income			722			58,616			48,888			—			—			—

Net amount recognized		$	(19,337	)	$	13,496		$	10,905		$	(12,203	)	$	(27,338	)	$	(26,369	)

F-22

For all pension plans presented above, the accumulated and projected benefit obligations exceed the fair value of plan assets. The accumulated benefit obligation at December 31, 2004 and 2003 was $24.7 million and $149.3 million, respectively. Non-US pension liabilities recognized in the amounts presented above are $3.2 million and $2.7 million at December 31, 2004 and 2003, respectively.

The key economic assumptions used in the computation of the respective benefit obligations for the years ended December 31, 2004 and 2003 presented above are as follows:


	Pension Benefits				Postretirement Benefits
	2004		Predecessor (Note 1) 2003		2004		Predecessor (Note 1) 2003
Weighted-average discount rate	5.8	%	6.2	%	5.8	%	6.3	%
Weighted-average rate of compensation increase	N/A		N/A		N/A		N/A

The following table represents the components of the net periodic benefit cost associated with the respective plans:


	Pension Benefits												Postretirement Benefits
				Predecessor (Note 1)											Predecessor (Note 1)
	From Inception (December 1, 2004) through December 31, 2004			11 Months ended November 30, 2004			Year-ended December 31, 2003			Year-ended December 31, 2002			From Inception (December 1, 2004) through December 31, 2004		11 Months ended November 30, 2004			Year-ended December 31, 2003		Year-ended December 31, 2002
Service cost	$	35		$	530		$	650		$	649		$	30	$	269		$	390	$	480
Interest cost		112			8,352			9,211			9,167			59		1,654			1,876		1,956
Recognized net actuarial loss		—			2,783			23			—			—		183			—		—
Expected return on plan assets		(31	)		(9,747	)		(10,971	)		(11,552	)		—		—			—		—
Amortization		—			14			1,266			296			—		(19	)		232		99

Net periodic benefit cost	$	116		$	1,932		$	179		$	(1,440	)	$	89	$	2,087		$	2,498	$	2,535

F-23

The key economic assumptions used in the computation of the respective net periodic benefit cost for the periods presented above are as follows:


	Pension Benefits								Postretirement Benefits
			Predecessor (Note 1)								Predecessor (Note 1)
	From Inception (December 1, 2004) through December 31, 2004		11 Months ended November 30, 2004		Year-ended December 31, 2003		Year-ended December 31, 2002		From Inception (December 1, 2004) through December 31, 2004		11 Months ended November 30, 2004		Year-ended December 31, 2003		Year-ended December 31, 2002
Discount rate	6.0	%	6.2	%	7.2	%	7.5	%	6.0	%	6.3	%	6.8	%	7.5	%
Expected return on plan assets	8.5	%	8.5	%	9.0	%	9.0	%	N/A		N/A		N/A		N/A
Compensation rate increase	N/A		N/A		N/A		4.0	%	N/A		N/A		N/A		N/A

The reasonableness of the expected return on the funded pension plan assets was determined by three separate analyses: (i) review of forty years of historical data of portfolios with similar asset allocation characteristics, (ii) analysis of six years of historical performance for the Predecessor plan assuming the current portfolio mix and investment manager structure, and (iii) a projected portfolio performance, assuming the plan's target asset allocation, done by a third party.

For measurement of the postretirement benefit obligations and net periodic benefit costs, an annual rate of increase in the per capita cost of covered health care benefits of approximately 7.5% was assumed. This rate was assumed to decrease gradually to 5% by 2008 and remain at that level thereafter. The assumed health care trends are a significant component of the postretirement benefit costs. A one-percentage-point change in assumed health care cost trend rates would have the following effects:

		1-Percentage- Point Increase			1-Percentage- Point Decrease
Effect on service and interest cost components for the period December 1, 2004 through December 31, 2004		$	13		$	(11	)
Effect on the December 31, 2004 post-retirement benefit obligation			2,317			(1,864	)

F-24

The asset allocations for the Company's and the Predecessor's funded retirement plans at December 31, 2004 and 2003, respectively, and the target allocation for 2005, by asset category, are as follows:

	Allocation Percentage of Plan Assets at Year-End
Asset Category	2005 Target		2004 Actual		Predecessor (Note 1) 2003 Actual
Equity securities	65	%		(i)	70	%
Fixed income securities	35	%		(i)	30	%

(i): The assets for the Company's funded retirement plan at the end of 2004 were held by the Predecessor, awaiting transfer. Once received, they will be invested in a manner consistent with the 2005 target allocation.

The investment strategy is to achieve a rate of return on the plan's assets that, over the long-term, will fund the plan's benefit payments and will provide for other required amounts in a manner that satisfies all fiduciary responsibilities. A determinant of the plan's returns is the asset allocation policy. The plan's asset mix will be reviewed by the Company periodically, but at least quarterly, to rebalance within the target guidelines. The Company will also periodically review investment managers to determine if the respective manager has performed satisfactorily when compared to the defined objectives, similarly invested portfolios, and specific market indices.

Expected cash flows

The following table provides the amounts expected to be contributed to the plans by the Company and the expected benefit payments, which are made from the plans' assets and includes the participants' share of the costs, which is funded by participant contributions. The amounts in the table are actuarially determined and reflect the Company's best estimate given its current knowledge; actual amounts could be materially different.

		Pension Benefits		Postretirement Benefits
Expected Company contribution to plan trusts	2005	$	525	$	114
Expected benefit payments (from plan assets)	2005		181		114
	2006		323		200
	2007		475		288
	2008		639		405
	2009		791		530
	2010-2014		6,292		4,145

F-25

Defined Contribution Plans

At November 30, 2004, the Company established a defined contribution plan for substantially all full-time U.S.-based employees on terms that mirror those previously provided by the Predecessor. All active employees became participants of the Company's plan and all of their account balances in the Predecessor plans were transferred to the Company's plan at Inception.

Under the terms of both the Company and Predecessor plans, eligible employees may contribute from one to fifteen percent of their compensation to the plan on a pre-tax basis. The Company makes a matching contribution equal to half of the first six percent of salary contributed by each employee and makes a unilateral contribution of three percent of all employees' salary (including non-contributing employees). The Company's expense associated with the defined contribution plan was $0.3 million during the period December 1, 2004 through December 31, 2004. The Predecessor's expense was $2.4 million during the eleven months ending November 30, 2004, and $2.0 million in each of the years ending December 31, 2003 and 2002.

10. Long-Term Debt

Revolving Credit Agreement

At November 30, 2004, the Company entered into an agreement for up to $30 million of revolving borrowings from a commercial bank (the Revolving Credit Agreement), subject to certain limitations resulting from the requirement of the Company to maintain certain levels of collateralized assets, as defined in the Revolving Credit Agreement. The Company may use up to $10 million of its availability under the Revolving Credit Agreement for standby letters of credit issued on its behalf, the issuance of which will reduce the amount of borrowings that would otherwise be available to the Company. The Company may re-borrow any amounts paid to reduce the amount of outstanding borrowings; however, all borrowings under the Revolving Credit Agreement must be repaid in full as of November 30, 2009.

Borrowings under the Revolving Credit Agreement bear interest, at the Company's election, at LIBOR plus 250 basis points annually or the lenders Prime Rate plus 125 basis points, but in no event no lower than 3.75%. The Company must also pay 2.0% per annum on all outstanding letters of credit, 0.375% per annum on the unused availability under the Revolving Credit Agreement and $10,000 per quarter in service fees. The Company incurred approximately $1.9 million in fees associated with the issuance of the Revolving Credit Agreement which have been capitalized as deferred financing costs and will be amortized over the five year life of the Revolving Credit Agreement as a component of interest expense.

Substantially all of the Company's assets have been pledged as collateral against outstanding borrowings under the Revolving Credit Agreement. The Revolving Credit Agreement requires the Company to maintain a minimum fixed charge coverage ratio (when availability under the line falls below $12.5 million) and imposes customary affirmative covenants and restrictions on the Company. The Company was in compliance with all requirements of the Revolving Credit Agreement at December 31, 2004.

There were no borrowings under the Revolving Credit Agreement at December 31, 2004 however; the lender had issued $1.9 million of outstanding letters of credit on behalf of the Company.

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9% Senior Secured Notes

At November 30, 2004, the Company issued 9% Senior Secured Notes (Senior Notes), with a face value of $165 million. Interest on the Senior Notes is payable semiannually, in arrears, on June 1 and December 1 of each year, beginning June 1, 2005, at an annual rate of 9%. The effective interest rate on the Senior Notes is approximately 10.0%, after consideration of the amortization of $6.6 million related to initial offer discounts (included in long-term debt) and $4.9 million of deferred financing costs (included in other assets).

The Senior Notes mature on December 1, 2011 unless previously redeemed by the Company. Through December 1, 2007, the Company may elect to redeem up to 35% of the Senior Notes with the proceeds of certain equity transactions by paying a 9% premium of the amounts paid by such redemption. From December 1, 2008 through November 30, 2009, the Company may also elect to redeem any or all of the Senior Notes still outstanding by paying a 4.5% premium of the amounts paid for such redemptions. A 2.25% premium is due for redemptions completed from December 1, 2009 to November 30, 2010. Subsequent to November 30, 2010, the Company may elect to redeem any or all of the Senior Notes then outstanding at face value.

In connection with the issuance of the Senior Notes, the Company agreed to file a registration statement with the U.S. Securities and Exchange Commission in an effort to convert the Senior Notes to publicly traded instruments. Should the Company fail to file the required registration statement or there are delays in the effectiveness of such filing, the Company will incur additional interest at an annual rate of .25%, increasing by an additional .25% for each 90 day delay in the registration up to a 1% maximum amount of additional interest.

The Senior Notes are guaranteed by the Company's U.S. domestic subsidiaries and are secured by a second priority lien, subject to first priority liens securing the Revolving Credit Agreement, on substantially all of the Company's assets. The Senior Notes contain numerous terms, covenants and conditions, which impose substantial limitations on the Company. The Company was in compliance with all of the requirements of the Senior Notes and Revolving Credit Agreement at December 31, 2004.

Predecessor Debt

During 2003, the Predecessor borrowed $70.6 million from its parent company which was used to retire all, then existing, bank debt. In connection with the repayment of the bank debt, the Predecessor wrote off $0.4 million of deferred financing costs, which was charged to the gain on sale of assets and other non-operating expense (income) caption in the statement of operations. The amounts borrowed from the parent company bore an interest rate of 5.83 percent which approximated the rates incurred by the parent company for their third-party debt. In addition to the outstanding debt payable to its parent company, the Predecessor also had $0.7 million of outstanding letters of credit at December 31, 2003.

Capital Leases (see also Note 15)

The Company and the Predecessor lease a building and certain equipment under capital lease arrangements, whose obligations are included in both short-term and long-term debt. Capital lease

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obligations amounted to approximately $1.1 million and $1.9 million at December 31, 2004 and 2003, respectively.

11. Stockholder's Equity

The Company has authorized, issued and outstanding 1,000 shares of $0.001 par-value common stock, all of which is held by Altra Holdings, Inc. ("Holdings"), the Company's parent and sole shareholder.

For the Predecessor, all historical equity balances are reflected in the consolidated financial statements as invested capital. The annual net cash flows from the Boston Gear division, the recognition or settlement of intercompany balances of any of the Predecessor entities with Colfax, federal and state income taxes payable or receivable and allocations of balances from Colfax are reflected as contributions from and distributions to affiliates in the consolidated statements of stockholders' equity.

12. Related-Party Transactions

Kilian Acquisition

As discussed in Note 3, the Company acquired Kilian in exchange for the assumption of $12.2 million of Kilian's debt and the issuance of $8.8 million of common stock issued to Holdings. Holdings had previously acquired Kilian through the exchange of preferred and common stock in Holdings that was issued to certain preferred and common shareholders of Kilian, the majority of whom were represented by Genstar Capital, L.P. ("Genstar"), one of the primary shareholders in Holdings.

Management Agreement

At November 30, 2004, the Company and Holdings entered into an advisory services agreement with Genstar whereby Genstar agreed to provide certain management, business strategy, consulting, financial advisory and acquisition related services to the Company. Pursuant to the agreement, the Company will pay to Genstar an annual consulting fee of $1.0 million (payable quarterly, in arrears at the end of each calendar quarter), reimbursement of out-of-pocket expenses incurred in connection with the advisory services and an advisory fee of 2.0% of the aggregate consideration relating to any acquisition or dispositions completed by the Company. Genstar also received a one-time transaction fee of $4.0 million, and $0.4 million in reimbursement of transaction related expenses, for advisory services it provided in connection with the acquisitions and related financings discussed in Notes 3 and 10.

Transition Services Agreement

In connection with the acquisition of the Predecessor operations from Colfax, the Company entered into a transition services agreement with Colfax whereby Colfax agreed to provide the Company with transitional support services. The transition services include the continued access to Colfax' employee benefit plans through February 2005, the provision of certain accounting, treasury, tax and payroll services through various periods all of which end by May 2005 and the transition of management oversight of various on-going business initiatives through May 2005. These services are to

F-28

be provided at Colfax' cost which are not expected to aggregate to a material amount or exceed in any material respects the historical cost of obtaining such services.

Predecessor Related Party Transactions

Danaher Corporation (Danaher) was related to the Predecessor through common ownership. Revenue from sales of products to Danaher was approximately $0.3 for the eleven months ended November 30, 2004 and $0.3 million for the years ended December 31, 2003 and 2002. There were no accounts receivables from Danaher as of December 31, 2003. Purchases of products from Danaher amounted to $5.8 million, $7.2 million and $5.4 million in eleven months ending November 30, 2004 and the years ending December 31, 2003 and 2002, respectively. The Company had outstanding accounts payable due to Danaher of $0.8 million at December 31, 2003.

Certain corporate and administrative services were performed for the Predecessor by Colfax personnel. Such services consist primarily of executive management, accounting, legal, tax, treasury and finance. No significant amounts are included in the Company's financial statements for such services although certain professional fees including auditing fees have been allocated to the Predecessor results in the Statement of Operations and Comprehensive Income (Loss). In addition, the Predecessor participated in group purchasing arranged by Colfax for costs such as insurance, health care and raw materials. These direct expenses were charged to the Predecessor entities as incurred.

The Predecessor also participated in the Colfax treasury function whereby funds were loaned to and borrowed from affiliates in the normal course of business. The net amount due to Colfax and its subsidiaries, which are not a component of the Predecessor, are reported as affiliate debt in the Balance Sheet.

13. Concentrations of Credit, Business Risks and Workforce

Financial instruments, which are potentially subject to concentrations of credit risk, consist primarily of trade accounts receivable. The Company manages this risk by conducting credit evaluations of customers prior to delivery or commencement of services. When the Company enters into a sales contract, collateral is normally not required from the customer. Payments are typically due within thirty days of billing. An allowance for potential credit losses is maintained, and losses have historically been within management's expectations.

Credit related losses may occur in the event of non-performance by counterparties to financial instruments. Counterparties typically represent international or well established financial institutions.

One customer represents 9.0%, 10.3%, 10.8%, and 11.9% of the Company's and Predecessor's sales for the periods December 1, 2004 through December 31, 2004 and January 1, 2004 through November 30, 2004 and the years ended December 31, 2003 and 2002, respectively. Outstanding accounts receivables from that customer were $2.7 million and $2.5 million at December 31, 2004 and 2003, respectively.

F-29

The Company and its Predecessor operate in a single business segment. Net sales to third parties and property, plant and equipment by geographic region are as follows (in thousands):

		Net Sales
				Predecessor (Note 1)						Property, Plant and Equipment
		December 1, 2004 through December 31, 2004		11 Months ended November 30, 2004		Year-ended December 31, 2003		Year-ended December 31, 2002		December 31, 2004		Predecessor (Note 1) December 31, 2003
North America		$	23,172	$	207,933	$	198,146	$	192,836	$	60,079	$	53,048
Europe			4,632		54,141		54,672		48,403		7,216		7,540
Asia and other			922		13,165		13,947		11,978		1,624		1,723

	Total	$	28,726	$	275,239	$	266,765	$	253,217	$	68,919	$	62,311

Net sales to third parties are attributed to the geographic regions based on the country in which the shipment originates. Amounts attributed to the geographic regions for long-lived assets are based on the location of the entity, which holds such assets.

Approximately 32.3% of the Company's labor force (19.8% and 90.5% in the United States and Europe, respectively) is represented by collective bargaining agreements.

14. Predecessor Restructuring, Asset Impairment and Transition Expenses

On January 1, 2003, the Predecessor adopted SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". SFAS No. 146 nullifies EITF 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)". Restructuring plans initiated prior to December 31, 2002 are accounted for according to EITF 94-3 while all restructuring actions initiated after December 31, 2002 will be accounted for according to SFAS No. 146. SFAS No. 146 requires that a liability for costs associated with an exit or disposal activity be recognized when the liability is incurred. EITF 94-3 had previously required that a liability for such costs be recognized at the date of the Company's commitment to an exit or disposal plan. SFAS No. 146 may effect the periods in which costs are recognized although the total amount of costs recognized will be the same as previous accounting guidance.

Beginning in the fourth quarter of 2002, the Predecessor adopted certain restructuring programs intended to improve operational efficiency by reducing headcount, consolidating its operating facilities and relocating manufacturing and sourcing to low-cost countries. The Predecessor did not exit any of its operating activities and these programs did not reduce sales. The amounts recorded as restructuring charges, asset impairment and transition expenses in the Consolidated Statement of Comprehensive Income (Loss) for the period January 1, 2004 through November 30, 2004 and the years ended

F-30

December 31, 2003 and 2002 amounted to approximately $0.9 million, $11.1 million and $27.8 million, respectively, and were comprised of the following major categories:

	11 Months ended November 30, 2004		Year-ended December 31, 2003		Year-ended December 31, 2002
Accrued restructuring charge	$	—	$	—	$	7,133
Impairment or loss on sale of fixed assets		306		2,011		18,109
Period cost transition expenses		641		9,074		2,583

	$	947	$	11,085	$	27,825

Predecessor restructuring charges of approximately $7.1 million were primarily comprised of $6.7 million in severance cost related to work force reductions of approximately 315 manufacturing and administrative associates. The programs involved plant closures and outsourcing, which resulted in a loss on sale of assets of approximately $2.0 million in 2003 and a non-cash asset impairment charge of approximately $18.1 million for 2002. Certain period costs such as relocation, training, recruiting, duplicative associates and moving costs resulting from restructuring programs amounted to $0.6 million, $9.1 million and $2.6 million for the period January 1, 2004 through November 30, 2004 and the years ended December 31, 2003 and 2002, respectively, were included as a component of transition expense. A summary of Predecessor cost reduction programs follows.

United States Programs

The speed reducer product line consolidation resulted in the closure of the Florence, KY distribution center, the Louisburg, NC manufacturing facility and the Charlotte, NC manufacturing facility. The three closed locations were moved into a new leased facility in Charlotte, NC. In addition the Norwalk, CA distribution center was downsized and moved into a smaller facility and the engineering and purchasing functions were moved from Quincy, MA to the new Charlotte, NC production facility. This program, other than the payment of accrued severance amounts, was substantially completed in the third quarter of 2003.

The electronic clutch brake product line consolidation resulted in the closure of the Roscoe, IL manufacturing facility. The high volume turf and garden product line was moved to the Columbia City, IN coil production facility, while the industrial and vehicular product lines were moved into the South Beloit, IL manufacturing facility. This program, other than the payment of accrued severance amounts and certain remaining transition expenses, was substantially completed in the fourth quarter of 2003.

The sprag clutch product line consolidation resulted in the closure of the LaGrange, IL manufacturing facility. Production was relocated to the Formsprag production facility in Warren, MI. This program, other than the payment of accrued severance amounts, was substantially completed in the fourth quarter of 2002.

The heavy duty clutch product relocation resulted in the closure of the Waukesha, WI production facility, which was consolidated into the Wichita Falls, TX heavy duty clutch production facility. Engineering support remained in Waukesha in a separate smaller leased facility. This program, other

F-31

than the payment of accrued severance amounts, was substantially completed in the third quarter of 2003.

Administrative process streamlining primarily involved the consolidation of the speed reducer and electronic clutch brake product lines customer service function in South Beloit, IL. This program, other than the payment of accrued severance amounts, was substantially completed in the third quarter of 2003.

European and Asian Programs

The European and Asian electronic clutch brake consolidation resulted in the closure of the Bishop Auckland, United Kingdom manufacturing facility with production being relocated to Angers, France and Shenzhen, China. In addition, customer service and engineering functions were centralized in Angers, France. The two French facilities in Angers and Lemans were also rationalized. The Lemans facility was downsized to focus exclusively on machining operations. All other manufacturing and administrative functions were centralized in Angers. This program, other than the payment of accrued severance amounts, was substantially completed in the fourth quarter of 2003.

Predecessor restructuring charges by program at December 31, 2003 were classified as accrued liabilities in the Combined Balance Sheets as follows:

	Balance At December 31, 2003		Initial Restructuring Charge
United States programs:
Speed reducer product line consolidation	$	338	$	1,003
Electronic clutch brake consolidation		725		1,633
Sprag clutch consolidation		89		430
Heavy duty clutch consolidation		158		574
Administrative streamlining		8		652

Total United States programs	$	1,318	$	4,292
Europe and Asia electronic clutch brake consolidation		288		2,841

Total restructuring charge/accrual	$	1,606	$	7,133

F-32

Predecessor asset impairment and losses on sales of assets by program for the period January 1, 2004 through November 30, 2004 and each of the two years ending December 31, 2003 were as follows:

	11 Months ended November 30, 2004		December 31, 2003		December 31, 2002
United States programs:
Speed reducer product line consolidation	$	—	$	2,011	$	1,040
Electronic clutch brake consolidation		306		—		14,565
Sprag clutch consolidation		—		—		1,023
Heavy duty clutch consolidation		—		—		341

Total United States programs	$	306	$	2,011	$	16,969
Europe and Asia electronic clutch brake consolidation		—		—		1,140

Total non-cash asset impairment and loss on sale of assets	$	306	$	2,011	$	18,109

Predecessor total transition expense by program for the period January 1, 2004 through November 30, 2004 and each of the two years ending December 31, 2003 were as follows:

	11 Months ended November 30, 2004		December 31, 2003		December 31, 2002
United States programs:
Speed reducer product line consolidation	$	—	$	3,516	$	116
Electronic clutch brake consolidation		641		2,203		973
Sprag clutch consolidation		—		24		629
Heavy duty clutch consolidation		—		516		—
Administrative streamlining		—		592		484

Total United States programs	$	641	$	6,851	$	2,202
Europe and Asia electronic clutch brake consolidation		—		2,223		381

Total transition expense	$	641	$	9,074	$	2,583

F-33

Predecessor transition expense by major expense component for the period January 1, 2004 through November 30, 2004 and each of the two years ending December 31, 2003 were as follows:

	11 Months ended November 30, 2004		December 31, 2003		December 31, 2002
Training	$	—	$	914	$	112
Relocation		—		959		401
Moving costs		—		3,485		983
Severance		—		767		—
Duplicate employees		—		1,689		99
ERP system integration		—		477		281
Other		641		783		707

Total transition expense	$	641	$	9,074	$	2,583

Cash paid by the Predecessor to support its restructuring programs for the period January 1, 2004 through November 30, 2004 and the year ended December 31, 2003 was as follows:

	11 Months ended November 30, 2004		Year ended December 31, 2003		Combined, Period from January 1, 2003 through November 30, 2004
United States programs:
Speed reducer product line consolidation	$	331	$	583	$	914
Electronic clutch brake consolidation		711		908		1,619
Sprag clutch consolidation		89		103		192
Heavy duty clutch consolidation		158		416		574
Administrative streamlining		8		284		292

Total United States programs	$	1,297	$	2,294	$	3,591
Europe and Asia electronic clutch brake consolidation		288		2,553		2,841

Cash charged against the restructuring reserve	$	1,585	$	4,847	$	6,432
Transition expense		641		9,074		9,715

Total cash utilized	$	2,226	$	13,921	$	16,147

F-34

The Predecessor's accrued restructuring expenses were essentially fully-paid by the Predecessor at November 30, 2004, as follows:

	11 Months ended November 30, 2004			December 31, 2003
Balance at beginning of period	$	1,606		$	6,453
Cash payments		(1,585	)		(4,847	)

Balance at end of period	$	21		$	1,606

15. Commitments and Contingencies

Minimum Lease Obligations

The Company leases certain offices, warehouses, manufacturing facilities, automobiles and equipment with various terms that range from a month to month basis to ten year terms and which, generally, include renewal provisions. Future minimum rent obligations under non-cancelable operating leases are as follows:

Year ending December 31:		Operating Leases		Capital Leases
2005		$	3,463	$	913
2006			3,050		152
2007			2,009		102
2008			845		7
2009			531		—
Thereafter			1,976		—

	Total lease obligations	$	11,874		1,174

Less amounts representing interest					(95	)

Present value of minimum capital lease obligations				$	1,079

Net rent expense under operating leases for the periods from Inception to December 31, 2004, and January 1, 2004 to November 30, 2004, and the years ended December 31, 2003 and 2002 was approximately $0.5 million, $5.4 million, $6.1 million and $5.9, respectively.

General Litigation

The Company is involved in various pending legal proceedings arising out of the ordinary course of business. None of these legal proceedings is expected to have a material adverse effect on the financial condition of the Company. With respect to these proceedings, management believes that it will prevail, has adequate insurance coverage or has established appropriate reserves to cover potential liabilities. Any costs that management estimates may be paid related to these proceedings or claims are accrued when the liability is considered probable and the amount can be reasonably estimated. There can be no assurance, however, as to the ultimate outcome of any of these matters, and if all or substantially all of

F-35

these legal proceedings were to be determined adversely to the Company, there could be a material adverse effect on the financial condition of the Company.

As parent to the Predecessor, Colfax maintained reserves for various legal and environmental matters. Unless a legal or environmental matter of Colfax could be specifically identified as related to the Predecessor, no reserve has been provided for in the Predecessor financial statements. In addition, Colfax has agreed to indemnify the Company for certain pre-existing matters up to agreed upon limits.

16. Guarantor Subsidiaries

The following tables present separately the financial position, results of operations, and cash flows for the Company and its Predecessor for: (a) the subsidiaries of the Company and its Predecessor that are guarantors of the Notes, which include all wholly-owned U.S. domestic subsidiaries of the Company (Guarantor Subsidiaries), and (b) the subsidiaries of the Company and its Predecessor that are not guaranteeing the Notes, which include all non-domestic subsidiaries of the Company (Non-Guarantor Subsidiaries). Separate financial statements of the Guarantor Subsidiaries are not presented because their guarantees are full and unconditional and joint and several, and the Company believes separate financial statements and other disclosures regarding the Guarantor Subsidiaries are not material to investors. The Notes were entered into and issued in connection with the acquisition of the Predecessor and Kilian (see Note 3.)

F-36

Condensed Consolidating Balance Sheets of the Company
December 31, 2004

		December 31, 2004
		Issuer		Guarantor			Non Guarantor		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents		$	2,219	$	(1,913	)	$	4,423	$	—		$	4,729
Trade receivables, less allowance for doubtful accounts			—		31,412			14,557		—			45,969
Loan receivable from related parties			—		11,392			912		(12,304	)		—
Inventories, less allowances for obsolete materials			1,989		41,628			14,292		—			57,909
Prepaid expenses and other			—		3,738			3,399		—			7,137
Deferred income taxes			4,180		—			—		—			4,180

Total current assets			8,388		86,257			37,583		(12,304	)		119,924
Property, plant and equipment, net			8,554		48,998			11,367		—			68,919
Intangible assets, net			48,758		—			—		—			48,758
Goodwill			41,536		—			—		—			41,536
Deferred income taxes			4,923		—			—		—			4,923
Other assets			6,658		2,607			20		—			9,285
Investments in subsidiaries			95,617		—			—		(95,617	)		—

		$	214,434	$	137,862		$	48,970	$	(107,921	)	$	293,345

Liabilities and (deficit) equity
Current liabilities:
	Accounts payable	$	—	$	20,968		$	7,819	$	—		$	28,787
	Accrued payroll		733		7,076			3,966		—			11,775
	Accruals and other current liabilities		3,130		9,974			1,289		—			14,393
	Current portion of long-term debt		—		247			666		—			913
	Affiliate debt		4,978		(4,014	)		11,340		(12,304	)		—

Total current liabilities			8,841		34,251			25,080		(12,304	)		55,868
Long-term debt, less current portion			158,479		261			—		—			158,740
Pension liabilities			—		16,301			3,233		—			19,534
Other post-retirement benefits			—		12,089			—		—			12,089

Total liabilities			167,320		62,902			28,313		(12,304	)		246,231

Total stockholder's equity			47,114		74,960			20,657		(95,617	)		47,114

		$	214,434	$	137,862		$	48,970	$	(107,921	)	$	293,345

F-37

Condensed Consolidating Balance Sheets of the Predecessor
December 31, 2003

		Predecessor (Note 1) December 31, 2003
		Guarantor			Non- Guarantor		Eliminations			Consolidated
Assets
Current assets:
	Cash and cash equivalents	$	(125	)	$	3,288	$	—		$	3,163
	Trade receivables, less allowance for doubtful accounts		24,740			16,104		(5,147	)		35,697
	Loan receivable from related parties		10,451			—		(10,451	)		—
	Inventories, less allowances for obsolete materials		34,838			9,766		—			44,604
	Prepaid expenses and other		1,807			3,025		—			4,832
	Deferred income taxes		7,322			196		—			7,518

Total current assets			79,033			32,379		(15,598	)		95,814
Property, plant and equipment, net			53,048			9,263		—			62,311
Goodwill			626			13,894		—			14,520
Deferred income taxes			2,511			572		—			3,083
Other assets			2,657			23		—			2,680
Investments in subsidiaries			8,713			—		(8,713	)		—

		$	146,588		$	56,131	$	(24,311	)	$	178,408

Liabilities and (deficit) equity
Current liabilities:
	Accounts payable	$	17,708		$	8,547	$	(5,147	)	$	21,108
	Accrued payroll		8,115			3,286		—			11,401
	Accruals and other current liabilities		7,466			2,749		—			10,215
	Current portion of long-term debt and notes payable		321			542		—			863
	Affiliate debt		52,132			28,922		(10,451	)		70,603

Total current liabilities			85,742			44,046		(15,598	)		114,190
Long-term debt, less current portion			317			708		—			1,025
Pension liabilities			35,651			2,664		—			38,315
Other post-retirement benefits			23,864			—		—			23,864

Total liabilities			145,574			47,418		(15,598	)		177,394

Total stockholder's equity			1,014			8,713		(8,713	)		1,014

		$	146,588		$	56,131	$	(24,311	)	$	178,408

F-38

Condensed Consolidating Statements of Operations of the Company
Period from Inception (December 1, 2004) through December 31, 2004

	Period from Inception (December 1, 2004) to December 31, 2004
	Issuer			Guarantor			Non-Guarantor		Eliminations			Consolidated
Net sales	$	—		$	22,692		$	6,850	$	(816	)	$	28,726
Cost of sales		1,738			18,050			5,079		(816	)		24,051

Gross (loss) profit		(1,738	)		4,642			1,771		—			4,675
Selling, general and administrative expenses		455			3,624			638		—			4,717
Research and development expenses		—			81			202		—			283

(Loss) income from operations		(2,193	)		937			931		—			(325	)
Interest expense (income)		1,424			(82	)		108		—			1,450
Equity in earnings of subsidiaries		1,842			—			—		(1,842	)		—

Income (loss) before income taxes		(1,775	)		1,019			823		(1,842	)		(1,775	)
(Benefit) provision for income taxes		(248	)		—			—		—			(248	)

Net (loss) income	$	(1,527	)	$	1,019		$	823	$	(1,842	)	$	(1,527	)

Condensed Consolidating Statements of Operations of the Predecessor
Period from January 1, 2004 through November 30, 2004

	Predecessor (Note 1) Period from January 1, 2004 to November 30, 2004
	Guarantor			Non-Guarantor		Eliminations			Consolidated
Net sales	$	212,207		$	72,402	$	(9,370	)	$	275,239
Cost of sales		168,263			51,634		(9,370	)		210,527

Gross profit		43,944			20,768		—			64,712
Selling, general and administrative expenses		31,691			13,783		—			45,474
Research and development expenses		977			1,975		—			2,952
Restructuring charge, asset impairment and transition expenses		947			—		—			947

Income (loss) from operations		10,329			5,010		—			15,339
Interest expense		2,751			1,543		—			4,294
Loss (gain) on sale of assets and other non-operating expense (income)		(1,317	)		165		—			(1,152	)
Equity in income of subsidiaries		1,742			—		(1,742	)		—

Income (loss) before income taxes		10,637			3,302		(1,742	)		12,197
Provision (benefit) for income taxes		3,870			1,560		—			5,430

Net (loss) income	$	6,767		$	1,742	$	(1,742	)	$	6,767

F-39

Condensed Consolidating Statements of Operations of the Predecessor
Year ended December 31, 2003

	Predecessor (Note 1) Year ended December 31, 2003
	Guarantor			Non-Guarantor			Eliminations			Consolidated
Net sales	$	204,885		$	71,798		$	(9,918	)	$	266,765
Cost of sales		164,816			53,366			(9,918	)		208,264

Gross profit		40,069			18,432			—			58,501
Selling, general and administrative expenses		34,782			14,653			—			49,435
Research and development expenses		1,058			1,615			—			2,673
Restructuring charge, asset impairment and transition expenses		8,928			2,157			—			11,085

Income (loss) from operations		(4,699	)		7			—			(4,692	)
Interest expense		3,570			1,798			—			5,368
Loss (gain) on sale of assets and other non-operating expense (income)		481			(16	)		—			465
Equity in loss of subsidiaries		(2,349	)		—			2,349			—

Income (loss) before income taxes		(11,099	)		(1,775	)		2,349			(10,525	)
Provision (benefit) for income taxes		(2,166	)		574			—			(1,592	)

Net loss	$	(8,933	)	$	(2,349	)	$	2,349		$	(8,933	)

F-40

Condensed Consolidating Statements of Operations of the Predecessor
Year ended December 31, 2002

	Predecessor (Note 1) Year ended December 31, 2002
	Guarantor			Non-Guarantor			Eliminations			Consolidated
Net sales	$	198,781		$	62,970		$	(8,534	)	$	253,217
Cost of sales		152,082			46,990			(8,534	)		190,538

Gross profit		46,699			15,980			—			62,679
Selling, general and administrative expenses		35,462			12,841			—			48,303
Research and development expenses		1,589			1,514			—			3,103
Other expense (income)		573			(573	)		—			—
Restructuring charge, asset impairment and transition expenses		23,560			4,265			—			27,825

Loss from operations		(14,485	)		(2,067	)		—			(16,552	)
Interest expense		3,457			2,032			—			5,489
Gain on sale of assets and other non-operating expense (income)		(302	)		(10	)		—			(312	)
Equity in loss of subsidiaries		(3,469	)		—			3,469			—

Loss before income taxes, discontinued operations and cumulative effect of change in accounting principle		(21,109	)		(4,089	)		3,469			(21,729	)
Provision (benefit) for income taxes		3,075			(620	)		—			2,455

Loss before discontinued operations and cumulative effect of change in accounting principle	$	(24,184	)	$	(3,469	)	$	3,469		$	(24,184	)
Loss from operations and disposal of discontinued operations, net of income taxes		700			—			—			700

Loss before cumulative effect of change in accounting principle		(24,884	)		(3,469	)		3,469			(24,884	)
Cumulative effect of change in accounting principle—goodwill impairment		(83,412	)		—			—			(83,412	)

Net loss	$	(108,296	)	$	(3,469	)	$	3,469		$	(108,296	)

F-41

Condensed Consolidating Statements of Cash Flows of the Company
Period from Inception (December 1, 2004) through December 31, 2004

				Issuer			Guarantor			Non- Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
	Net income (loss)			$	(1,527	)	$	1,019		$	823		$	(1,842	)	$	(1,527	)
	Undistributed equity in earnings of subsidiaries				(1,842	)		—			—			1,842			—
	Adjustments to reconcile net loss to cash provided by operating activities:
		Depreciation			39			520			122			—			681
		Amortization of intangible assets			246			—			—			—			246
		Amortization and write-off of deferred loan costs			89			—			—			—			89
		Accretion of debt discount			79			—			—			—			79
		Amortization of inventory fair value adjustment			1,699			—			—			—			1,699
		Provision (benefit) for deferred taxes			(1,031	)		—			—			—			(1,031	)
		Changes in operating assets and liabilities:
			Trade receivables		—			(1,403	)		1,079			—			(324	)
			Inventories		—			994			(1,406	)		—			(412	)
			Accounts payable and accrued liabilities		1,873			9,043			(1,326	)		—			9,590
			Other current assets and liabilities		—			(2,222	)		96			—			(2,126	)
			Other operating assets and liabilities		—			(393	)		58			—			(335	)

			Net cash provided by (used in) continuing operating activities		(375	)		7,558			(554	)		—			6,629
			Net cash provided by discontinued operations		—			—			—			—			—

			Net cash provided by (used in) operating activities		(375	)		7,558			(554	)		—			6,629
Cash flows from investing activities:
	Purchases of fixed assets				—			(243	)		(46	)		—			(289	)
	Acquisitions, net of cash acquired				(183,522	)		(1,949	)		4,316			—			(181,155	)
	Sale of fixed assets				—			—			—			—			—

Net cash used in investing activities					(183,522	)		(2,192	)		4,270			—			(181,444	)
Cash flows from financing activities:
	Contributed capital				39,994			—			—			—			39,994
	Proceeds from issuance of senior subordinated notes				158,400			—			—			—			158,400
	Payment of debt acquired in acquisitions				(12,178	)		—			—			—			(12,178	)
	Payment of debt issuance costs				(6,747	)		—			—			—			(6,747	)
	Borrowings under revolving credit agreements				4,988			—			—			—			4,988
	Payments on revolving credit agreements				(4,988	)		—			—			—			(4,988	)
	Change in affiliated debt				4,980			(4,575	)		(405	)		—			—

Net cash (used in) provided by financing activities					184,449			(4,575	)		(405	)		—			179,469

Effect of exchange rates on cash					—			—			75			—			75

Increase (decrease) in cash and cash equivalents					552			791			3,386			—			4,729
Cash and cash equivalents, beginning of the period					—			—			—			—			—

Cash and cash equivalents, end of period				$	552		$	791		$	3,386		$	—		$	4,729

F-42

Condensed Consolidating Statements of Cash Flows of the Predecessor
Period from January 1, 2004 through November 30, 2004

				Guarantor			Non- Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
	Net income (loss)			$	6,767		$	1,742		$	(1,742	)	$	6,767
	Adjustments to reconcile net loss to cash provided by operating activities:
		Depreciation			5,157			1,036			—			6,193
		Impairments, (gains) losses on fixed assets			(1,300	)		—			—			(1,300	)
		Provision (benefit) for deferred taxes			102			15			—			117
		Changes in operating assets and liabilities:
			Trade receivables		(492	)		(3,705	)		—			(4,197	)
			Inventories		(2,947	)		(3,808	)		—			(6,755	)
			Accounts payable and accrued liabilities		4,723			(1,091	)		—			3,632
			Other current assets and liabilities		2,883			(1,406	)		—			1,477
			Other operating assets and liabilities		(2,794	)		16			—			(2,778	)

			Net cash provided by (used in) operating activities		12,099			(7,201	)		(1,742	)		3,156

Cash flows from investing activities:
	Purchases of fixed assets				(2,533	)		(956	)		—			(3,489	)
	Sale of fixed assets				4,442			—			—			4,442

Net cash provided by (used in) investing activities					1,909			(956	)		—			953
Cash flows from financing activities:
	Change in affiliated debt				(13,697	)		(827	)		—			(14,524	)
	(Distribution to) contribution from affiliates				2,467			4,161			1,742			8,370

Net cash (used in) provided by financing activities					(11,230	)		3,334			1,742			(6,154	)

Effect of exchange rates on cash					—			159			—			159

Increase (decrease) in cash and cash equivalents					2,778			(4,664	)		—			(1,886	)
Cash and cash equivalents, beginning of the period					(125	)		3,288			—			3,163

Cash and cash equivalents, end of period				$	2,653		$	(1,376	)	$	—		$	1,277

F-43

Condensed Consolidating Statements of Cash Flows of the Predecessor
Year ended December 31, 2003

				Predecessor (Note 1) Year ended December 31, 2003
				Guarantor			Non- Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
	Net income (loss)			$	(8,933	)	$	(2,349	)	$	2,349		$	(8,933	)
	Adjustments to reconcile net loss to cash provided by operating activities:
		Depreciation and amortization			7,181			1,257			—			8,438
		Amortization and write-off of deferred loan costs			587			—			—			587
		Impairment or loss on fixed assets			2,126			—			—			2,126
		Provision for deferred taxes			(2,480	)		(199	)		—			(2,679	)
		Changes in operating assets and liabilities:
			Trade receivables		(1,082	)		504			—			(578	)
			Inventories		(2,617	)		239			—			(2,378	)
			Accounts payable and accrued liabilities		(12,131	)		(1,645	)		—			(13,776	)
			Other current assets and liabilities		(981	)		458			—			(523	)
			Other operating assets and liabilities		1,186			(219	)		—			967

			Net cash provided by (used in) operating activities		(17,144	)		(1,954	)		2,349			(16,749	)
Cash flows from investing activities:
	Purchases of fixed assets				(4,381	)		(913	)		—			(5,294	)
	Sale of fixed assets				3,721			—			—			3,721

Net cash used in investing activities					(660	)		(913	)		—			(1,573	)
Cash flows from financing activities:
	Change in debt				(51,668	)		(12,574	)		—			(64,242	)
	Change in affiliate debt				52,132			18,471			—			70,603
	Contributed capital				5,000			—			—			5,000
	(Distribution to) contribution from affiliates				9,764			(3,570	)		(2,349	)		3,845

Net cash (used in) provided by financing activities					15,228			2,327			(2,349	)		15,206

Effect of exchange rates on cash					—			1,065			—			1,065

Increase (decrease) in cash and cash equivalents					(2,576	)		525			—			(2,051	)
Cash and cash equivalents, beginning of year					2,451			2,763			—			5,214

Cash and cash equivalents, end of year				$	(125	)	$	3,288		$	—		$	3,163

F-44

Condensed Consolidating Statements of Cash Flows of the Predecessor
Year ended December 31, 2002

			Predecessor (Note 1) Year ended December 31, 2002
			Guarantor			Non- Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
	Net income (loss)		$	(108,296	)	$	(3,469	)	$	3,469		$	(108,296	)
	Adjustments to reconcile net loss to cash provided by operating activities:
	Depreciation and amortization			8,333			1,300			—			9,633
	Amortization and write-off of deferred loan costs			405			—			—			405
	Cumulative effect of change in accounting principle—goodwill impairment			83,412			—			—			83,412
	Impairment or loss on fixed assets			16,969			1,140			—			18,109
	Provision for deferred taxes			2,524			(457	)		—			2,067
	Changes in operating assets and liabilities:
		Trade receivables		4,636			(1,785	)		—			2,851
		Inventories		(1,773	)		988			—			(785	)
		Accounts payable and accrued liabilities		11,827			3,427			—			15,254
		Other current assets and liabilities		561			(1,600	)		—			(1,039	)
		Other operating assets and liabilities		(3,891	)		2,149			—			(1,742	)

		Net cash provided by continuing operating activities		14,707			1,693			3,469			19,869
		Net cash provided by discontinued operating activities		2,065			—			—			2,065
		Net cash provided by operating activities		16,772			1,693			3,469			21,934
Cash flows from investing activities:
	Purchases of fixed assets			(5,303	)		(608	)		—			(5,911	)
	Sale of fixed assets			1,326			—			—			1,326

Net cash used in investing activities				(3,977	)		(608	)		—			(4,585	)
Cash flows from financing activities:
	Change in debt			(6,541	)		(98	)		—			(6,639	)
	(Distribution to) contribution from affiliates			(4,433	)		1,504			(3,469	)		(6,398	)

Net cash (used in) provided by financing activities				(10,974	)		1,406			(3,469	)		(13,037	)

Effect of exchange rates on cash				—			(1,804	)		—			(1,804	)

Increase in cash and cash equivalents				1,821			687			—			2,508
Cash and cash equivalents, beginning of year				630			2,076			—			2,706

Cash and cash equivalents, end of year			$	2,451		$	2,763		$	—		$	5,214

F-45

17. Unaudited Quarterly Results of Operations (in thousands):

				Predecessor (Note 1)
	Period from Inception (December 1) to December 31, 2004			Predecessor (Note 1)
	Period from Inception (December 1) to December 31, 2004			Period from October 1, 2004 to November 30, 2004			Third			Second			First
Year ending December 31, 2004
Net sales	$	28,726		$	46,540		$	72,542		$	78,151		$	78,006
Gross profit		4,675			8,831			17,615			18,222			20,044
Net income (loss)	$	(1,527	)	$	(253	)	$	(1,127	)	$	2,627		$	5,520
				Fourth			Third			Second			First
Year ending December 31, 2003
Net sales				$	67,050		$	62,794		$	68,632		$	68,289
Gross profit					16,350			12,405			15,188			14,558
Net loss				$	(1,825	)	$	(3,463	)	$	(1,996	)	$	(1,649	)

F-46

INDEPENDENT AUDITOR'S REPORT

Board of Directors and Management of
Kilian Manufacturing Corporation and
Kilian Canada ULC
Syracuse, New York

We have audited the accompanying combined balance sheets of Kilian Manufacturing Corporation and Kilian Canada ULC as of October 22, 2004 and December 27, 2003 and the related combined statements of income, stockholders' equity and cash flows for the periods from December 28, 2003 through October 22, 2004, February 15, 2003 through December 27, 2003, and December 29, 2002 through February 14, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these combined financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of Kilian Manufacturing Corporation and Kilian Canada ULC as of October 22, 2004 and December 27, 2003, and the combined results of their operations and their cash flows for the period from December 28, 2003 through October 22, 2004, February 15, 2003 through December 27, 2003, and December 29, 2002 through February 14, 2003 in conformity with accounting principles generally accepted in the United States of America.

/s/ FIRLEY, MORAN, FREER & EASSA, P.C.

Syracuse, New York
December 14, 2004

F-47

COMBINED BALANCE SHEETS

KILIAN MANUFACTURING CORPORATION AND
KILIAN CANADA ULC

		October 22, 2004		December 27, 2003
ASSETS
CURRENT ASSETS
	Cash	$	242,744	$	4,306,367
	Accounts receivable, net of allowance for doubtful accounts of $56,301 in 2004 and $44,570 in 2003.		6,235,300		4,755,286
	Inventories		5,332,835		4,290,665
	Deferred income taxes		1,081,652		737,441
	Prepaid expenses		56,425		34,635

TOTAL CURRENT ASSETS			12,948,956		14,124,394
OTHER ASSETS
	Deferred income taxes		780,106		775,024
	Intercompany receivable-Torrington		337,292		-0-
	Intercompany receivable-Timken		11,250,542		2,563,889
	Goodwill		2,658,000		2,658,000

			15,025,940		5,996,913
PROPERTY AND EQUIPMENT
	Land, building and improvements		3,978,140		3,878,260
	Machinery and equipment		7,250,869		6,817,153
	Construction in progress		9,422		139,296

			11,238,431		10,834,709
Less accumulated depreciation and amortization			2,266,380		1,108,744

			8,972,051		9,725,965

		$	36,946,947	$	29,847,272

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
	Accounts payable and accrued expenses	$	5,911,822	$	4,517,228
	Bank drafts in excess of deposits		551,114		-0-
	Accrued income taxes payable		3,995,238		1,977,385

	TOTAL CURRENT LIABILITIES		10,458,174		6,494,613
INTERCOMPANY PAYABLE—TORRINGTON			-0-		1,078,039
STOCKHOLDERS' EQUITY
	Capital Stock		20,749,518		20,749,518
	Retained earnings		4,743,849		1,107,638
	Accumulated other comprehensive income		995,406		417,464

			26,488,773		22,274,620
COMMITMENTS AND CONTINGENCIES
RELATED PARTY TRANSACTIONS

		$	36,946,947	$	29,847,272

See notes to combined financial statements.

F-48

COMBINED STATEMENTS OF INCOME

KILIAN MANUFACTURING CORPORATION AND
KILIAN CANADA ULC

		December 28, 2003 through October 22, 2004			Post-acquisition February 15, through December 27, 2003			Pre-acquisition December 29, 2002 through February 14, 2003
Net sales		$	34,955,348		$	33,548,487		$	5,199,621
Cost of products sold			27,414,445			27,948,873			3,792,794

GROSS PROFIT			7,540,903			5,599,614			1,406,827
Selling, general and administrative expenses			1,940,134			1,731,255			325,786
Goodwill impairment charge			-0-			2,173,087			-0-
Interest income			(174,729	)		(26,798	)		-0-

INCOME BEFORE INCOME TAXES			5,775,498			1,722,070			1,081,041
Income tax expense			2,139,287			614,432			408,674

	NET INCOME	$	3,636,211		$	1,107,638		$	672,367

See notes to combined financial statements.

F-49

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY

KILIAN MANUFACTURING CORPORATION AND
KILIAN CANADA ULC

		Capital Stock		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balances at December 28, 2002		$	1,868,340	$	56,355,715		$	(447,973	)	$	57,776,082
Comprehensive income:
	Net income for the period ended February 14, 2003				672,367						672,367
	Foreign currency translation adjustment							92,723			92,723

											765,090

Balances at February 14, 2003			1,868,340		57,028,082			(355,250	)		58,541,172
Effect of purchase by the Timken Company on February 15, 2003			18,881,178		(57,028,082	)		355,250			(37,791,654	)
Comprehensive income:
	Net income for the period ended December 27, 2003				1,107,638						1,107,638
	Foreign currency translation adjustment							417,464			417,464

											1,525,102

Balances at December 27, 2003			20,749,518		1,107,638			417,464			22,274,620
Comprehensive income:
	Net income for the period ended October 22, 2004				3,636,211						3,636,211
	Foreign currency translation adjustment							577,942			577,942

											4,214,153

BALANCES AT OCTOBER 22, 2004		$	20,749,518	$	4,743,849		$	995,406		$	26,488,773

See notes to combined financial statements.

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COMBINED STATEMENTS OF CASH FLOWS

KILIAN MANUFACTURING CORPORATION AND
KILIAN CANADA ULC

				December 28, 2003 through October 22, 2004			Post-acquisition February 15 through December 27, 2003			Pre-acquisition December 29, 2002 through February 14, 2003
INCREASE (DECREASE) IN CASH
	Cash flows from (used in) operating activities:
		Cash received from customers		$	33,475,334		$	33,886,118		$	4,505,158
		Cash paid to suppliers, vendors and employees			(27,181,575	)		(32,748,664	)		(3,078,623	)
		Income taxes (paid) refunded			(470,727	)		(1,858,062	)		288,120

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES					5,823,032			(720,608	)		1,714,655
	Cash flows used in investing activities:
		Purchase of property and equipment			(366,140	)		(146,620	)		(158,819	)

NET CASH USED IN INVESTING ACTIVITIES					(366,140	)		(146,620	)		(158,819	)
	Cash flows from (used in) financing activities:
		Net payments (to) from Torrington			(1,415,331	)		7,403,466			(8,364,627	)
		Net payments to Timken			(8,118,771	)		(2,239,148	)		-0-

		NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			(9,534,102	)		5,164,318			(8,364,627	)
Effect of exchange rates on cash					13,587			9,277			81,887

INCREASE (DECREASE) IN CASH					(4,063,623	)		4,306,367			(6,726,904	)
Cash at beginning of period					4,306,367			-0-			6,726,904

		CASH AT END OF PERIOD		$	242,744		$	4,306,367		$	-0-

RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
	Net income for the period			$	3,636,211		$	1,107,638		$	672,367
	Adjustments to reconcile net income to net cash provided by (used in) operating activities:
		Depreciation and amortization			1,120,054			1,137,738			174,408
		Allowance for doubtful accounts			9,408			-0-			-0-
		Deferred income taxes			(339,233	)		(1,507,158	)		(849,857	)
		Decrease (increase) in:
			Accounts receivable		(1,489,422	)		337,631			(694,463	)
			Inventories		(1,042,170	)		(598,500	)		(300,515	)
			Prepaid expenses and other current assets		(21,790	)		5,414			(40,049	)
		Increase (decrease) in:
			Accounts payable and accrued expenses		1,932,121			113,234			1,220,853
			Accrued income taxes payable		2,017,853			(1,316,605	)		1,531,911

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES				$	5,823,032		$	(720,608	)	$	1,714,655

See notes to combined financial statements.

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NOTES TO COMBINED FINANCIAL STATEMENTS
KILIAN MANUFACTURING CORPORATION AND KILIAN CANADA ULC
October 22, 2004, December 27, 2003 and February 14, 2003

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business and Principles of Combination: Kilian Manufacturing Corporation ("Kilian Syracuse"), along with its affiliated organization, Kilian Canada ULC formerly known as Kilian Manufacturing, Ltd. ("Kilian Canada"), headquartered in Syracuse, New York, designs and manufactures machined-race bearings and multi-component assemblies. Kilian Syracuse and Kilian Canada (collectively, the Company) manufactures its proprietarily-designed bearings and assemblies in its three manufacturing plants, one in Syracuse, New York and two in Toronto, Canada.

Kilian Syracuse was a wholly owned subsidiary of The Torrington Company (Torrington). Torrington was a subsidiary of Ingersoll-Rand Company Limited (Ingersoll-Rand) prior to being acquired by The Timken Company in February 2003. Kilian Canada was a division of Ingersoll-Rand Canada until such acquisition. On October 23, 2004 the Company was sold to The Kilian Company and 3091780 Nova Scotia Company. (also see Note B for further discussion.)

The combined financial statements include the accounts of Kilian Syracuse and Kilian Canada. All significant intercompany accounts and transactions have been eliminated in combination.

Accounting Period: The Company generally follows a "52-53" accounting calendar with its year end being the last Saturday in December.

Due to changes in ownership (see Note B) the statements of income, stockholders' equity and cash flows presented in the accompanying financial statements are for periods less than an annual accounting period and are not necessarily indicative of the results that may be expected for the full fiscal year.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Concentration of Credit and Vendor Risk: The Company generally sells its products on open account and performs periodic credit evaluations on its customers, and generally does not require collateral. The Company considers trade accounts receivable to be past due when in excess of 30 days past terms, and charges off uncollectible balances when all collection efforts have been exhausted. For customers deemed at risk, the Company will demand prepayment or payment upon shipment. Five customers comprised approximately 34% and 28% of accounts receivable at October 22, 2004 and December 27, 2003, respectively. The same five customers also comprised approximately 23%, 21% and 19% of the Company's net sales for the periods ended October 22, 2004, December 27, 2003 and February 14, 2003, respectively. The Company has not incurred significant credit losses, which is consistent with management expectations.

Raw material purchases from two suppliers comprised approximately 64%, 60% and 62% of total purchases for the periods ended October 22, 2004, December 27, 2003 and February 14, 2003, respectively. Management strongly believes that it can find alternate suppliers if necessary.

Revenue Recognition: The Company ships and bills directly to end-user customers for the majority of its sales. The Company recognizes revenue from the sales of its products upon shipment of the product, which is when title and all risk of ownership are transferred.

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Accounts Receivable: Accounts receivable are recorded when invoices are issued and are presented in the balance sheet net of the allowance for doubtful accounts. Accounts receivable are written off when they are determined to be uncollectible. The allowance for doubtful accounts is estimated based on the Company's historical losses, the existing economic conditions in its industry, and the financial stability of its customers.

Inventories: Inventories are carried at the lower of cost or market, cost being determined principally on the basis of standards which approximate actual costs on the first-in first-out method (FIFO), and market being determined by net realizable value.

Property, Plant and Equipment: Property, plant, and equipment, including major renewal or betterments, are recorded at cost. Upon retirement or disposal of an asset, the cost and related accumulated depreciation are eliminated from the respective accounts and resulting gains or losses are included in operations. Expenditures for maintenance and repairs are charged to operations as incurred.

Depreciation and amortization are provided on the straight-line method over the estimated useful lives of the assets as follows:

Buildings and improvements		10 to 40 years
Machinery and equipment		3 to 12 years

Goodwill: The Company recorded as goodwill the excess of purchase price over the fair value of the identifiable net assets acquired. Statements of Financial Accounting Standards No. 142, prescribes a two step process for impairment testing of goodwill which is performed annually, as well as when an event triggering impairment may have occurred. The first step tests for impairment while the second step, if necessary, measures the impairment (also see Note E).

Income Taxes: The Company provides for income taxes in accordance with the liability method as set forth in Statements of Financial Accounting Standards No. 109, Accounting for Income Taxes. Under the liability method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax basis of assets and liabilities using enacted tax rates in effect with the years in which the differences are expected to reverse.

Shipping and Handling Costs: Shipping and handling costs are expensed as incurred and are included in costs of products sold.

Research and Development Costs: Research and development costs are expensed as incurred. Research and development costs amounted to approximately $83,000, $86,000, and $14,000 for the periods ended October 22, 2004, December 27, 2003 and February 14, 2003, respectively.

Foreign Currency Translation: In accordance with Financial Accounting Standards Board Statement No. 52, all balance sheet accounts of Kilian Canada are translated at current exchange rates and income statement items are translated at an average exchange rate for the year. The gain or loss resulting from translating Kilian Canada financial statements is recorded as a separate component of the combined statement of stockholder's equity as other comprehensive income (loss). Transaction gains and losses are recorded in operations.

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NOTE B—CHANGES IN OWNERSHIP

On February 15, 2003, The Timken Company purchased the Torrington Company and the net assets of what is currently Kilian Canada ULC from Ingersoll-Rand Company, Ltd. in a transaction accounted for under the purchase method. Since the transaction included the Company, the purchase price has been reflected in the Company's asset bases and assumed liabilities as of that date as follows:

Purchase price	$	20,749,518
Assets acquired		(19,153,966	)
Liabilities assumed		3,235,535

Excess	$	4,831,087

On October 23, 2004 the Company was sold to the Kilian Company and 3091780 Nova Scotia Company.

NOTE C—INVENTORIES

Inventories consist of the following:

	October 22, 2004		December 27, 2003
Raw material and work in process	$	3,402,395	$	3,146,211
Finished goods		1,930,440		1,144,454

	$	5,332,835	$	4,290,665

NOTE D—INCOME TAXES

Pretax income (loss) was $5,099,292, $3,597,714, and $976,573 from domestic operations and $676,206, $(1,875,644), and $104,468 from foreign operations for the October 22, 2004, December 27, 2003 and February 14, 2003 periods.

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Significant components of income tax expense (benefit) attributable to operations are as follows:

		Period ended October 22, 2004			Post-acquisition February 15 through December 27, 2003			Pre-acquisition December 29, 2002 through February 14, 2003
Current:
	Federal	$	1,920,681		$	1,788,890		$	1,130,671
	Foreign		318,092			110,443			100,424
	State		239,747			222,257			27,436

Total Current			2,478,520			2,121,590			1,258,531
Deferred:
	Federal		(241,620	)		(1,132,016	)		(708,397	)
	Foreign		(39,132	)		(101,151	)		(48,694	)
	State		(58,481	)		(273,991	)		(92,766	)

Total deferred			(339,233	)		(1,507,158	)		(849,857	)

Total current and deferred		$	2,139,287		$	614,432		$	408,674

The Company's effective tax rate differs from the statutory U.S. federal income tax rate due primarily to the effects of foreign tax rate differential, state taxes and certain expenses not deductible for federal tax purposes.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

F-55

Significant components of the Company's deferred tax assets and liabilities consist of the following:

		October 22, 2004			December 27, 2003
Deferred tax assets:
	Post retirement benefits	$	778,284		$	723,450
	Retirement benefits		81,277			67,435
	Non-deductible reserves/accruals		189,750			160,544
	Inventories		328,173			262,178
	Insurance reserves		563,730			314,718
	Unrealized exchange (gain)/loss		143,454			56,364

Total deferred tax assets			2,084,668			1,584,689
Deferred tax liabilities:
	Tax over book depreciation		(222,910	)		(72,224	)

Total deferred tax liabilities			(222,910	)		(72,224	)

Net deferred tax assets		$	1,861,758		$	1,512,465

Classification of net deferred tax assets:
	Current	$	1,081,652		$	737,441
	Non-current		780,106			775,024

		$	1,861,758		$	1,512,465

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Management believes it is more likely than not the Company will realize the benefits of the deferred tax assets.

As discussed in Note B, the stock of Kilian Syracuse and Kilian Canada was sold on February 15, 2003. In the United States, the parties elected under Internal Revenue Code 338(h)(10) to report the stock transaction as the sale of assets. However, the domestic and foreign tax liabilities resulting from the sale remained the responsibility of the parent companies. Income taxes have been presented in conformity with the basis of presentation for financial reporting purposes that the transaction occurred at the parent company level and the income tax effect of the sale transaction has not been reflected.

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NOTE E—GOODWILL

As a result of the transactions that are more fully explained in Note B the following is a summary of the activity relating to goodwill:

Balance December 29, 2002	$	-0-
February 15, 2003—Timken purchase		4,831,087
Impairment charge		(2,173,087	)

Balances at October 22, 2004 and December 27, 2003	$	2,658,000

Goodwill and the corresponding impairment charge relates to Kilian Canada ULC. The amount of the impairment loss has been determined based on a combination of market prices and discounted cash flow calculations.

NOTE F—EMPLOYEE BENEFITS

Pension Plans and Postretirement Plan-Kilian Syracuse

Pre-Acquisition-December 29, 2002 through February 14, 2003: Kilian Syracuse salaried employees participated in the Ingersoll-Rand Pension Plan No. 1 (Salary Plan), a defined benefit plan, covering certain salaried employees of Ingersoll-Rand and its affiliates. Kilian Syracuse hourly employees participated in the Watertown/Kilian Hourly Defined Benefit Plan No. 45 (Hourly Plan), a defined benefit plan, covering certain hourly employees of Ingersoll-Rand and its affiliates. Kilian Syracuse was required to make an annual contribution of 2% of the employees' salary to the Hourly Plan.

Kilian Syracuse also participates in the Ingersoll-Rand Postretirement Plan.

Post Acquisition February 15, 2003 through October 22, 2004: Kilian Syracuse salaried employees participate in Part 10-The Timken Company Retirement Plan for Torrington Salaried Associates and hourly employees participate in Part 13-The Timken Company Retirement Plan for Torrington Northern Salaried Associates, both being defined benefit plans that roll up under The Timken-Latrobe-MPB-Torrington Retirement Plan. Contributions to these plans amounted to $172,467 and $90,468 in the periods ended December 27, 2003 and October 22, 2004, respectively. These amounts were allocated to Kilian Syracuse from Timken.

Kilian Syracuse also participates in The Timken Company Savings and Stock Investment Plan for Certain Timken US Corporation Non-bargaining Associates (Defined Contribution Plan), an employer contribution plan, covering certain salary and hourly employees of Timken. Kilian Syracuse matches 50% up to 6% of an eligible employees pay. Contributions to the Defined Contribution Plan totaled $173,818 and $176,642 in the periods ended December 27, 2003 and October 22, 2004, respectively.

Pension Plans-Kilian Canada

Kilian Canada offers an unqualified pension plan to substantially all of its employees. Kilian Canada contributes an amount equal to 3% of monthly employee earnings. The employee may also voluntarily contribute 1% to 6% of their respective earnings. Kilian Canada matches all or part of employee earnings depending on length of service. Kilian Canada contributions were $52,072, $288,135, and $268,195 for the periods ended February 14, 2003, December 27, 2003 and October 22, 2004, respectively.

F-57

NOTE G—EQUITY

The combined equity accounts of the Company at October 22, 2004 and December 27, 2003 consists of the following:

		October 22, 2004			December 27, 2003
Capital Stock:
	Kilian Manufacturing Corporation;	$	10,745,017		$	10,745,017
	Kilian Canada ULC		10,004,501			10,004,501

		$	20,749,518		$	20,749,518

Retained earnings (deficit):
	Kilian Manufacturing	$	6,231,538		$	2,992,574
	Kilian Canada ULC		(1,487,689	)		(1,884,936	)

		$	4,743,849		$	1,107,638

Accumulated Other Comprehensive Income:
	Kilian Canada ULC	$	995,406		$	417,464

NOTE H—COMMITMENTS AND CONTINGENCIES

Litigation: The Company is a defendant in certain legal actions incidental to its business. Management is vigorously defending these actions. The Company is also currently going through various levels of environmental testing at each of the three plants as part of the acquisition by The Timken Company. Because of the current state of certain proceedings and tests, no prediction can be made as to their ultimate outcome. In the opinion of management, the ultimate liability, if any, resulting from these pending actions will not have a material impact on the Company's future results of operations or financial position.

Warranty: The Company does not offer a basic limited warranty for its proprietary products. However, the Company does offer a generic 30-day return period for defective product. The Company also will provide warranties on a specific case-by-case basis at the discretion of management. For such specific cases, the Company estimates the costs that may be incurred and records a liability in the amount of such costs at the time product revenue is recognized. Factors that affect the Company's warranty liability include the internal and external costs necessary to satisfy the warranty claim.

F-58

Changes in the Company's warranty liability were approximately as follows:

Balance at December 29, 2002		$	365,000
	Warranties issued during pre-acquisition period		34,000
	Settlements issued during pre-acquisition period		-0-

Balance at February 14, 2003			399,000
	Warranties issued during post acquisition period		-0-
	Settlements made during post acquisition period		254,000

Balance at December 27, 2003			145,000
	Warranties issued during 2004		175,000
	Settlements made during 2004		-0-

Balance at October 22, 2004		$	320,000

Rental Expense: Rental expense under operating leases amounted to approximately $225,000, $218,000 and $31,000 for the periods ended October 22, 2004, December 27, 2003 and February 14, 2003, respectively.

Operating Lease: The Company leases a building in Toronto, Canada and certain equipment and vehicles under non-cancellable operating leases. The lease agreements expire at various times through 2009 and some include renewal options.

Future minimum lease payments under noncancelable operating leases as of October 22, 2004 are approximately as follows:

2004	$	45,000
2005		132,000
2006		35,000
2007		25,000
2008		17,000
Thereafter		12,000

	$	266,000

F-59

NOTE I—RELATED PARTY TRANSACTIONS

The financial statements include transactions with Torrington/Timken for the periods ended October 22, 2004, and December 27, 2003 and; with Torrington/Ingersoll Rand for the period ended February 14, 2003. The Company made net cash advances (borrowings) to/from Torrington on a combined basis of approximately $8,148,000, $3,388,000, and $(1,003,000) for the periods ended October 22, 2004, December 27, 2003 and February 14, 2003, respectively. Prior to the sale of the Company to The Timken Company, the Company participated in Torrington's centralized cash management system. Cash receipts in excess of cash requirements were transferred to Torrington. The Company was periodically advanced funds by Torrington. The advances to and from Torrington were non-interest bearing.

For the period ended October 22, 2004, December 27, 2003 and February 14, 2003, the Company had net sales of approximately $1,790,000, $1,893,000, and $250,000, respectively, to affiliated Torrington companies.

F-60

Offer to exchange all outstanding
$165,000,000 principal amount of
9% Senior Secured Notes due 2011

for

$165,000,000 principal amount of
9% Senior Secured Notes due 2011
registered under the Securities Act of 1933

(ALTRA LOGO)

PART II: INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The following is a summary of the statutes, charter and bylaw provisions or other arrangements under which the Registrants' directors and officers are insured or indemnified against liability in their capacities as such. All the directors and officers of the Registrants are covered by insurance policies maintained and held in effect by Altra Industrial Motion, Inc. against certain liabilities for actions taken in their capacities as such, including liabilities under the Securities Act.

REGISTRANTS INCORPORATED UNDER DELAWARE LAW

Altra Industrial Motion, Inc., The Kilian Company, Kilian Manufacturing Corporation and Warner Electric International, Inc. are incorporated under the laws of the State of Delaware.

Section 145 of Delaware General Corporation Law.

Section 145 of the Delaware General Corporation Law, or DGCL, provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit, or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful.

Section 145 also provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of Delaware or such other court shall deem proper.

To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith; provided that indemnification provided for by Section 145 or granted pursuant thereto shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and a Delaware corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such

II-1

capacity or arising out of such person's status as such whether or not the corporation would have the power to indemnify such person against such liabilities under Section 145.

Certificate of Incorporation Provisions on Indemnification.

The Certificate of Incorporation of Altra Industrial Motion, Inc. provides that a director of the corporation shall not be personally liable to either the corporation or any stockholder for monetary damages for a breach of fiduciary duty except for (i) breaches of the duty of loyalty, (ii) acts not in good faith or involving intentional misconduct, (iii) as required by Section 174 of the DGCL or (iv) a transaction resulting in an improper personal benefit. In addition the corporation has the power to indemnify any person serving as a director, officer or agent of the corporation to the fullest extent permitted by law.

The Amended and Restated Certificate of Incorporation of American Enterprises MPT Corp. provides that a director of the corporation shall not be personally liable to either the corporation or any stockholder for monetary damages for a breach of fiduciary duty except for (i) breaches of the duty of loyalty, (ii) acts not in good faith or involving intentional misconduct, (iii) as required by Section 174 of the DGCL or (iv) a transaction resulting in an improper personal benefit. In addition, to the extent permitted by law, the corporation has the has the power to indemnify employees or agents and shall indemnify its directors and officers.

The Amended and Restated Certificate of Incorporation of The Kilian Company provides that to the fullest extent permitted by the DGCL, a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. In addition, the corporation shall indemnify a director, officer or employee to the fullest extent permitted by law.

The Certificate of Incorporation of Warner Electric International Holding, Inc. provides that a director of the corporation shall not be personally liable to either the corporation or any stockholder for monetary damages for a breach of fiduciary duty except for (i) breaches of the duty of loyalty, (ii) acts not in good faith or involving intentional misconduct, (iii) as required by Section 174 of the DGCL or (iv) a transaction resulting in an improper personal benefit.

By-law Provisions on Indemnification.

The By-laws of Altra Industrial Motion, Inc., The Kilian Company and Warner Electric International Holding, Inc. generally provide that each corporation has the power to indemnify its directors, officers, employees and agents who are or were a party, or threatened to be made a party, to any threatened, pending, or contemplated action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was the director, officer, employee or agent of the corporation, or is or was serving in such a position at its request of any other corporation, partnership, joint venture, trust, organization or other enterprise.

The By-laws of American Enterprises MPT Corp. and the Kilian Company generally provide the corporation may purchase and maintain insurance to indemnify or insure directors, officers, employees and agents against liability arising from such persons status as such.

The above discussion of the DGCL and of the Certificates of Incorporation and By-Laws of the registrants incorporated under Delaware law is not intended to be exhaustive and is qualified in its entirety by such Certificates of Incorporation, By-Laws and the DGCL.

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REGISTRANTS EXISTING AS LIMITED LIABILITY COMPANIES UNDER DELAWARE LAW

Boston Gear LLC, Formsprag LLC, Nuttall Gear LLC, Warner Electric LLC and Warner Electric Technology LLC are limited liability companies organized under the laws of the State of Delaware.

Section 18-108 of the Delaware Limited Liability Company Act.

Section 18-108 of the Delaware Limited Liability Company Act, or the DLLC Act, provides that a limited liability company may, and shall have the power to, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever, subject to the standards and restrictions, if any, set forth in its limited liability company agreement.

Limited Liability Company Agreement Provisions on Indemnification

The Limited Liability Company Agreement of Boston Gear LLC, Limited Liability Company Agreement of Nuttall Gear LLC, Limited Liability Company Agreement of Warner Electric LLC and Limited Liability Company Agreement of Warner Electric Technology LLC, each provide that such company shall indemnify any member or officer of the company from any claim, action, liability, loss or damage in which such person may be involved and arising from or incidental to the business or activities of the company, provided such person's conduct does not constitute willful misconduct and the claim, action, suit, proceeding or counterclaim is not initiated by or on behalf of such person.

The Limited Liability Company Agreement of Formsprag LLC provides that that the company shall indemnify any member or officer of the company from any claim, action, liability, loss or damage in which such person may be involved and arising from or incidental to the business or activities of the company, provided such person's conduct (i) does not constitute a breach of the duty of loyalty, (ii) does not constitute willful misconduct and (iii) such person does not receive any improper personal benefit. In addition, the company may purchase and maintain insurance on behalf of the members or such other persons as the members shall determine.

The above discussion of the limited liability company registrants' LLC Agreements and of the DLLC Act is not intended to be exhaustive and is qualified in its entirety by the LLC Agreements and the DLLC Act.

REGISTRANTS EXISTING AS LIMITED PARTNERSHIPS UNDER DELAWARE LAW

Section 17-108 of the Delaware Revised Uniform Limited Partnership Act.

American Enterprises MPT Holdings, L.P. and Ameridrives International, L.P. are limited partnerships organized under the laws of the State of Delaware. Section 17-108 of the Delaware Revised Uniform Limited Partnership Act ("DRULPA") empowers a Delaware limited partnership to indemnify and hold harmless any partner or other person from and against all claims and demands whatsoever, subject to such standards and restrictions, if any, as are set forth in its partnership agreement.

Limited Partnership Agreement Provisions on Indemnification.

The Limited Partnership Agreement of American Enterprises MPT Holdings, L.P. and the Limited Partnership Agreement of Ameridrives International, L.P. authorize each partnership to indemnify, defend and hold harmless its partners, their stockholders, owners, directors, officers, employees and agents from and against any loss, liability, damage, cost or expense (including reasonable attorneys' fees) arising out of or alleged to arise out of any demands, claims, suits, actions or proceedings against any of them in or as a result of or relating to their respective capacities, actions or omissions with

II-3

respect to the partnership, or otherwise concerning the business or affairs of the partnership including, without limitation, any demands, claims, suits, actions or proceedings, initiated by any of the partnership's partners; provided, however that the acts or omissions of the partnership's general partner shall not be indemnified to the extent a court of competent jurisdiction finds, upon entry of a final judgment, that the same resulted from gross negligence, willful misconduct, recklessness, malfeasance or fraud. Indemnification will be made solely and entirely from assets of the partnership (excluding all assets of the partnership's partners other than those of and attributable to such partner's interest in the partnership), and no such partner shall be personally liable therefore. All such rights to indemnification will survive the dissolution of the partnership and the death, retirement, incompetency, insolvency or bankruptcy of any partner.

The above discussion of the limited partnership registrants' Limited Partnership Agreements and of the DRULPA is not intended to be exhaustive and is qualified in its entirety by the Limited Partnership Agreements and the DRULPA.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the registrants as disclosed above, the registrants have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

II-4

ITEM 21. EXHIBITS.

(a) The following exhibits are filed with this Registration Statement. Exhibits to be filed with an amendment are denominated with a (+).

NUMBER		DESCRIPTION
1.1		Purchase Agreement, dated as of November 22, 2004, between Altra Industrial Motion, Inc., Jefferies & Company, Inc. and the Guarantors listed therein
2.1		LLC Purchase Agreement, dated as of October 25, 2004, among Warner Electric Holding, Inc., Colfax Corporation and Altra Industrial Motion, Inc.
2.2		Assignment and Assumption Agreement, dated as of November 21, 2004, between Altra Holdings, Inc. and Altra Industrial Motion, Inc.
3.1		Certificate of Incorporation of Altra Industrial Motion, Inc.
3.2		By-laws of Altra Industrial Motion, Inc.
3.3		Amended and Restated Certificate of American Enterprises MPT Corp.
3.4		By-laws of American Enterprises MPT Corp.
3.5		Certificate of Limited Partnership of American Enterprises MPT Holdings, L.P., as amended
3.6		Agreement of Limited Partnership of American Enterprises MPT Holdings, L.P., as amended
3.7		Certificate of Limited Partnership of Ameridrives International, L.P., as amended
3.8		Agreement of Limited Partnership of Ameridrives International, L.P., as amended
3.9		Certificate of Formation of Boston Gear LLC.
3.10		Limited Liability Company Agreement of Boston Gear LLC.
3.11		Certificate of Formation of Formsprag LLC, as amended
3.12		Limited Liability Company Agreement of Formsprag LLC, as amended
3.13		Amended and Restated Certificate of Incorporation of The Kilian Company
3.14		By-laws of The Kilian Company
3.15		Certificate of Incorporation of Kilian Manufacturing Corporation
3.16		By-laws of Kilian Manufacturing Corporation
3.17		Certificate of Formation of Nuttall Gear L L C
3.18		Amended and Restated Limited Liability Company Agreement of Nuttall Gear L L C.
3.19		Certificate of Formation of Warner Electric LLC.
3.20		Limited Liability Company Agreement of Warner Electric LLC.
3.21		Certificate of Formation of Warner Electric Technology LLC.
3.22		Limited Liability Company Agreement of Warner Electric Technology LLC.
3.23		Certificate of Incorporation of Warner Electric International Holding, Inc.
3.24		By-laws of Warner Electric International Holding, Inc.
4.1		Indenture, dated as of November 30, 2004, among Altra Industrial Motion, Inc., the Guarantors party thereto and The Bank of New York Trust Company, N.A., as trustee
4.2		Form of 9% Senior Secured Notes due 2011 (included in Exhibit 4.1)
4.3		Registration Rights Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc., Jefferies & Company, Inc., and the Subsidiary Guarantors party thereto
5.1+		Opinion of Weil, Gotshal Manges LLP.
10.1		Agreement, dated as of October 24, 2004, between Ameridrives International, L.P. and United Steel Workers of America Local 3199-10
10.2		Labor Agreement, dated as of December 3, 2001, between Warner Electric LLC (formerly Warner Electric Inc.) and International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America, Local No. 155
10.3		Labor Agreement, dated as of January 30, 2005, between Warner Electric LLC (formerly Warner Electric Inc.) and United Steelworkers of America and Local Union No. 3245

II-5

10.4		Labor Agreement between, dated as of August 9, 2004 between Warner Electric LLC (formerly Warner Electric Inc.) and International Association of Machinists and Aerospace Works, AFL-CIO, and Aeronautical Industrial District Lode 776, Local Lodge 2771
10.5		Transition Services Agreement, dated as of November 30, 2004, among Warner Electric Holding, Inc., Colfax Corporation and Altra Industrial Motion, Inc.
10.6		Trademarks and Technology License Agreement, dated November 30, 2004, among Colfax Corporation, Altra Holdings, Inc. and Altra Industrial Motion, Inc.
10.7		Lease Agreement, dated as of February 13, 2004, between Quincy Hayward Street, LLC and Boston Gear LLC.
10.8		Lease Agreement, dated as of April 1, 1993, between Textron, Inc. and Nuttall Gear LLC
10.9		Lease Agreement, dated as of January 29, 2003, between Olds Properties Corporation and Warner Electric LLC.
10.10		Ontario Net Industrial Single Lease, dated November 4, 1994, between Slough Estates Canada Limited and Kilian Manufacturing Corporation, with extension dated June 22, 1999
10.11		Lease Agreement, dated as of January 1, 2003, between Warner Shui Hing Limited and Bogang Economic Development Company. (English language summary)
10.12		Lease Agreement, dated August 5, 1981, between Stieber GmbH and Schmidt Lacke GmbH. (English language summary)
10.13		Lease Agreement, dated as of December 21, 1984, between Stieber GmbH and Carola Grundstucksverwaltungsgesellschft GmbH. (English language summary)
10.14		Employment Agreement, dated as of January 6, 2005, between Altra Industrial Motion, Inc. and Michael L. Hurt
10.15		Employment Agreement, dated as of January 6, 2005, between Altra Industrial Motion, Inc. and Carl Christenson
10.16		Employment Agreement, dated as of January 12, 2005, between Altra Industrial Motion, Inc. and David Wall
10.17		Form of Transition Agreement
10.18		Advisory Services Agreement, dated as of November 30, 2004, among Altra Holdings, Inc., Altra Industrial Motion, Inc. and Genstar Capital L.P.
10.19		Altra Holdings, Inc. 2004 Equity Incentive Plan
10.20		Form of Restricted Stock Award Agreement
10.21		Stock Purchase Agreement dated as of November 30, 2004, between Altra Holdings, Inc. and Altra Industrial Motion, Inc.
10.22		Credit Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc. and certain subsidiaries of the Company, as Guarantors, the financial institutions listed therein, as Lenders, and Wells Fargo Bank, as Lead Arranger
10.23		Security Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc., the other Grantors listed therein and The Bank of New York Trust Company, N.A.
10.24		Patent Security Agreement, dated as of November 30, 2004, among Kilian Manufacturing Corporation, Warner Electric Technology LLC, Formsprag LLC, Boston Gear LLC, Ameridrives International, L.P. and The Bank of New York Trust Company, N.A.
10.25		Trademark Security Agreement, dated as of November 30, 2004, among Warner Electric Technology LLC, Boston Gear LLC and The Bank of New York Trust Company, N.A.
10.26		Intercreditor and Lien Subordination Agreement, dated as of November 30, 2004, among Wells Fargo Foothill, Inc., The Bank of New York Trust Company, N.A. and Altra Industrial Motion, Inc.
12.1		Computation of ratio of earnings to fixed charges
21.1		Subsidiaries of Altra Industrial Motion, Inc.
23.1		Consent of Ernst & Young LLP.
23.2		Consent of Firley, Moran, Freer & Eassa, P.C.

II-6

23.3+		Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5.1)
24.1		Power of Attorney (included on the signature pages hereto)
25.1		Statement of Eligibility of Trustee on Form T-1
99.1+		Form of Letter of Transmittal
99.2+		Form of Notice of Guaranteed Delivery
99.3+		Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
99.4+		Form of Letter to Beneficial Holders
99.5+		Exchange Agent Agreement, dated as of May , 2005, between Altra Industrial Motion, Inc. and The Bank of New York Trust Company, N.A.

+: To be filed by amendment
(b): Financial Statement Schedules

See financial statement Schedule II—Valuation and Qualifying Accounts that appears immediately following the index to exhibits of this registration statement.

All other schedules are omitted because they are not applicable or because the required information is shown in the financial statements as referred thereto.

II-7

ITEM 22. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 20 or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrants hereby undertake:

(1) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

(2) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(A) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933.

(B) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.

(C) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(3) That, for the purpose of determining liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(4) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the exchange offer.

(5) To respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of the receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

II-8

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Altra Industrial Motion, Inc. has duly caused this registration statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Quincy, State of Massachusetts, on the 13th day of May, 2005.

		ALTRA INDUSTRIAL MOTION, INC.
		By:		/s/ MICHAEL L. HURT
				Name: Michael L. Hurt
				Title: Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby appoints Michael L. Hurt, Jean-Pierre L. Conte and Darren J. Gold, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this Registration Statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing appropriate or necessary to be done, as fully and for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement and power of attorney have been signed by the following persons in the capacities indicated on the 13th day of May, 2005.

SIGNATURE		TITLE
/s/ MICHAEL L. HURT Michael L. Hurt		Chief Executive Officer and Director (principal executive officer)
/s/ DAVID WALL David Wall		Chief Financial Officer (principal financial officer and principal accounting officer)
/s/ FRANK K. BAUCHIERO Frank K. Bauchiero		Director
/s/ JEAN-PIERRE L. CONTE Jean-Pierre L. Conte		Director
/s/ DARREN J. GOLD Darren J. Gold		Director
/s/ LARRY MCPHERSON Larry McPherson		Director
/s/ RICHARD D. PATERSON Richard D. Paterson		Director

II-9

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, each of the registrants, as listed on the attached Schedule A, has duly caused this registration statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Quincy, State of Massachusetts, on the 13th day of May, 2005.

		On behalf of each Registrant listed on Schedule A hereto.
		By:		/s/ MICHAEL L. HURT
				Name: Michael L. Hurt
				Title: Chief Executive Officer

POWER OF ATTORNEY

SIGNATURE		TITLE
/s/ MICHAEL L. HURT Michael L. Hurt		Chief Executive Officer and Director (principal executive officer)
/s/ DAVID WALL David Wall		Chief Financial Officer (principal financial officer and principal accounting officer)
/s/ JEAN-PIERRE L. CONTE Jean-Pierre L. Conte		Director
/s/ DARREN J. GOLD Darren J. Gold		Director

II-10

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, each of the registrants, as listed on the attached Schedule B, has duly caused this registration statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Quincy, State of Massachusetts, on the 13th day of May, 2005.

		On behalf of each Registrant listed on Schedule B hereto.
		By:		/s/ MICHAEL L. HURT
				Name: Michael L. Hurt
				Title: Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby appoints Michael L. Hurt, Jean-Pierre L. Conte and Darren J. Gold, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing appropriate or necessary to be done, as fully and for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

SIGNATURE		TITLE
/s/ MICHAEL L. HURT Michael L. Hurt		Chief Executive Officer (principal executive officer)
/s/ DAVID WALL David Wall		Chief Financial Officer (principal financial officer and principal accounting officer)
/s/ MICHAEL L. HURT Michael L. Hurt		Chief Executive Officer of Altra Industrial Motion, Inc., as Member

II-11

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Nuttall Gear L L C has duly caused this registration statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Quincy, State of Massachusetts, on the 13th day of May, 2005.

		NUTTALL GEAR L L C
		By:		/s/ MICHAEL L. HURT
				Name: Michael L. Hurt
				Title: Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby appoints Michael L. Hurt, Jean-Pierre L. Conte and Darren J. Gold, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing appropriate or necessary to be done, as fully and for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

SIGNATURE		TITLE
/s/ MICHAEL L. HURT Michael L. Hurt		Chief Executive Officer (principal executive officer)
/s/ DAVID WALL David Wall		Chief Financial Officer (principal financial officer and principal accounting officer)
/s/ MICHAEL L. HURT Michael L. Hurt		Chief Executive Officer of American Enterprises MPT Corp., as Member

II-12

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Formsprag LLC has duly caused this registration statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Quincy, State of Massachusetts, on the 13th day of May, 2005.

		FORMSPRAG LLC
		By:		/s/ MICHAEL L. HURT
				Name: Michael L. Hurt
				Title: Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby appoints Michael L. Hurt, Jean-Pierre L. Conte and Darren J. Gold, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing appropriate or necessary to be done, as fully and for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

SIGNATURE		TITLE
/s/ MICHAEL L. HURT Michael L. Hurt		Chief Executive Officer (principal executive officer)
/s/ DAVID WALL David Wall		Chief Financial Officer (principal financial officer and principal accounting officer)
/s/ MICHAEL L. HURT Michael L. Hurt		Chief Executive Officer of Warner Electric LLC., as Member; and Chief Executive Officer of Ameridrives International, L.P., as Member

II-13

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, American Enterprises MPT Holdings, L.P. has duly caused this registration statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Quincy, State of Massachusetts, on the 13th day of May, 2005.

		AMERICAN ENTERPRISES MPT HOLDINGS, L.P.
		By:		Altra Industrial Motion, Inc., its General Partner
				/s/ MICHAEL L. HURT
				Name: Michael L. Hurt
				Title: Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby appoints Michael L. Hurt, Jean-Pierre L. Conte and Darren J. Gold, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing appropriate or necessary to be done, as fully and for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

SIGNATURE		TITLE

/s/ MICHAEL L. HURT Michael L. Hurt		Chief Executive Officer (principal executive officer)
/s/ DAVID WALL David Wall		Chief Financial Officer (principal financial officer and principal accounting officer)
/s/ FRANK K. BAUCHIERO Frank K. Bauchiero		Director of Altra Industrial Motion, Inc., its General Partner
/s/ JEAN-PIERRE L. CONTE Jean-Pierre L. Conte		Director of Altra Industrial Motion, Inc., its General Partner
/s/ DARREN J. GOLD Darren J. Gold		Director of Altra Industrial Motion, Inc., its General Partner

II-14

/s/ MICHAEL L. HURT Michael L. Hurt		Director of Altra Industrial Motion, Inc., its General Partner
/s/ LARRY MCPHERSON Larry McPherson		Director of Altra Industrial Motion, Inc., its General Partner
/s/ RICHARD D. PATERSON Richard D. Paterson		Director of Altra Industrial Motion, Inc., its General Partner

II-15

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Ameridrives International, L.P. has duly caused this registration statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Quincy, State of Massachusetts, on the 13th day of May, 2005.

		AMERIDRIVES INTERNATIONAL, L.P.
		By:		American Enterprises MPT Corp., its General Partner
				/s/ MICHAEL L. HURT
				Name: Michael L. Hurt
				Title: Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby appoints Michael L. Hurt, Jean-Pierre L. Conte and Darren J. Gold, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing appropriate or necessary to be done, as fully and for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

SIGNATURE		TITLE
/s/ MICHAEL L. HURT Michael L. Hurt		Chief Executive Officer (principal executive officer)
/s/ DAVID WALL David Wall		Chief Financial Officer (principal financial officer and principal accounting officer)
/s/ JEAN-PIERRE L. CONTE Jean-Pierre L. Conte		Director of American Enterprises MPT Corp., its General Partner
/s/ DARREN J. GOLD Darren J. Gold		Director of American Enterprises MPT Corp., its General Partner
/s/ MICHAEL L. HURT Michael L. Hurt		Director of American Enterprises MPT Corp., its General Partner

II-16

SCHEDULE A

AMERICAN ENTERPRISES MPT CORP.
THE KILIAN COMPANY
KILIAN MANUFACTURING CORPORATION
WARNER ELECTRIC INTERNATIONAL HOLDING, INC

A-1

SCHEDULE B

BOSTON GEAR LLC
WARNER ELECTRIC LLC
WARNER ELECTRIC TECHNOLOGY LLC

B-1

EXHIBIT INDEX

NUMBER		DESCRIPTION
1.1		Purchase Agreement, dated as of November 22, 2004, between Altra Industrial Motion, Inc., Jefferies & Company, Inc. and the Guarantors listed therein
2.1		LLC Purchase Agreement, dated as of October 25, 2004, among Warner Electric Holding, Inc., Colfax Corporation and Altra Industrial Motion, Inc.
2.2		Assignment and Assumption Agreement, dated as of November 21, 2004, between Altra Holdings, Inc. and Altra Industrial Motion, Inc.
3.1		Certificate of Incorporation of Altra Industrial Motion, Inc.
3.2		By-laws of Altra Industrial Motion, Inc.
3.3		Amended and Restated Certificate of American Enterprises MPT Corp.
3.4		By-laws of American Enterprises MPT Corp.
3.5		Certificate of Limited Partnership of American Enterprises MPT Holdings, L.P., as amended
3.6		Agreement of Limited Partnership of American Enterprises MPT Holdings, L.P., as amended
3.7		Certificate of Limited Partnership of Ameridrives International, L.P., as amended
3.8		Agreement of Limited Partnership of Ameridrives International, L.P., as amended
3.9		Certificate of Formation of Boston Gear LLC.
3.10		Limited Liability Company Agreement of Boston Gear LLC.
3.11		Certificate of Formation of Formsprag LLC, as amended
3.12		Limited Liability Company Agreement of Formsprag LLC, as amended
3.13		Amended and Restated Certificate of Incorporation of The Kilian Company
3.14		By-laws of The Kilian Company
3.15		Certificate of Incorporation of Kilian Manufacturing Corporation
3.16		By-laws of Kilian Manufacturing Corporation
3.17		Certificate of Formation of Nuttall Gear L L C
3.18		Amended and Restated Limited Liability Company Agreement of Nuttall Gear L L C.
3.19		Certificate of Formation of Warner Electric LLC.
3.20		Limited Liability Company Agreement of Warner Electric LLC.
3.21		Certificate of Formation of Warner Electric Technology LLC.
3.22		Limited Liability Company Agreement of Warner Electric Technology LLC.
3.23		Certificate of Incorporation of Warner Electric International Holding, Inc.
3.24		By-laws of Warner Electric International Holding, Inc.
4.1		Indenture, dated as of November 30, 2004, among Altra Industrial Motion, Inc., the Guarantors party thereto and The Bank of New York Trust Company, N.A., as trustee
4.2		Form of 9% Senior Secured Notes due 2011 (included in Exhibit 4.1)
4.3		Registration Rights Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc., Jefferies & Company, Inc., and the Subsidiary Guarantors party thereto
5.1+		Opinion of Weil, Gotshal Manges LLP.
10.1		Agreement, dated as of October 24, 2004, between Ameridrives International, L.P. and United Steel Workers of America Local 3199-10
10.2		Labor Agreement, dated as of December 3, 2001, between Warner Electric LLC (formerly Warner Electric Inc.) and International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America, Local No. 155
10.3		Labor Agreement, dated as of January 30, 2005, between Warner Electric LLC (formerly Warner Electric Inc.) and United Steelworkers of America and Local Union No. 3245
10.4		Labor Agreement between, dated as of August 9, 2004 between Warner Electric LLC (formerly Warner Electric Inc.) and International Association of Machinists and Aerospace Works, AFL-CIO, and Aeronautical Industrial District Lode 776, Local Lodge 2771
10.5		Transition Services Agreement, dated as of November 30, 2004, among Warner Electric Holding, Inc., Colfax Corporation and Altra Industrial Motion, Inc.
10.6		Trademarks and Technology License Agreement, dated November 30, 2004, among Colfax Corporation, Altra Holdings, Inc. and Altra Industrial Motion, Inc.

10.7		Lease Agreement, dated as of February 13, 2004, between Quincy Hayward Street, LLC and Boston Gear LLC.
10.8		Lease Agreement, dated as of April 1, 1993, between Textron, Inc. and Nuttall Gear LLC
10.9		Lease Agreement, dated as of January 29, 2003, between Olds Properties Corporation and Warner Electric LLC.
10.10		Ontario Net Industrial Single Lease, dated November 4, 1994, between Slough Estates Canada Limited and Kilian Manufacturing Corporation, with extension dated June 22, 1999
10.11		Lease Agreement, dated as of January 1, 2003, between Warner Shui Hing Limited and Bogang Economic Development Company. (English language summary)
10.12		Lease Agreement, dated August 5, 1981, between Stieber GmbH and Schmidt Lacke GmbH. (English language summary)
10.13		Lease Agreement, dated as of December 21, 1984, between Stieber GmbH and Carola Grundstucksverwaltungsgesellschft GmbH. (English language summary)
10.14		Employment Agreement, dated as of January 6, 2005, between Altra Industrial Motion, Inc. and Michael L. Hurt
10.15		Employment Agreement, dated as of January 6, 2005, between Altra Industrial Motion, Inc. and Carl Christenson
10.16		Employment Agreement, dated as of January 12, 2005, between Altra Industrial Motion, Inc. and David Wall
10.17		Form of Transition Agreement
10.18		Advisory Services Agreement, dated as of November 30, 2004, among Altra Holdings, Inc., Altra Industrial Motion, Inc. and Genstar Capital L.P.
10.19		Altra Holdings, Inc. 2004 Equity Incentive Plan
10.20		Form of Restricted Stock Award Agreement
10.21		Stock Purchase Agreement dated as of November 30, 2004, between Altra Holdings, Inc. and Altra Industrial Motion, Inc.
10.22		Credit Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc. and certain subsidiaries of the Company, as Guarantors, the financial institutions listed therein, as Lenders, and Wells Fargo Bank, as Lead Arranger
10.23		Security Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc., the other Grantors listed therein and The Bank of New York Trust Company, N.A.
10.24		Patent Security Agreement, dated as of November 30, 2004, among Kilian Manufacturing Corporation, Warner Electric Technology LLC, Formsprag LLC, Boston Gear LLC, Ameridrives International, L.P. and The Bank of New York Trust Company, N.A.
10.25		Trademark Security Agreement, dated as of November 30, 2004, among Warner Electric Technology LLC, Boston Gear LLC and The Bank of New York Trust Company, N.A.
10.26		Intercreditor and Lien Subordination Agreement, dated as of November 30, 2004, among Wells Fargo Foothill, Inc., The Bank of New York Trust Company, N.A. and Altra Industrial Motion, Inc.
12.1		Computation of ratio of earnings to fixed charges
21.1		Subsidiaries of Altra Industrial Motion, Inc.
23.1		Consent of Ernst & Young LLP
23.2		Consent of Firley, Moran, Freer & Eassa, P.C.
23.3+		Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5.1)
24.1		Power of Attorney (included on the signature pages hereto)
25.1		Statement of Eligibility of Trustee on Form T-1
99.1+		Form of Letter of Transmittal
99.2+		Form of Notice of Guaranteed Delivery
99.3+		Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
99.4+		Form of Letter to Beneficial Holders

99.5+

Exchange Agent Agreement, dated as of May , 2005, between Altra Industrial Motion, Inc. and The Bank of New York Trust Company, N.A.

+: To be filed by Amendment.

Item 21(b)

Altra Industrial Motion, Inc.
SCHEDULE II—Valuation and Qualifying Accounts

Reserve for uncollectible accounts:	Balance at beginning of period	Additions	Deductions		Balance at end of period
Predecessor—For the year ended December 31, 2002	2,923	1,533	(1,518	)	2,939
Predecessor—For the year ended December 31, 2003	2,939	730	(2,053	)	1,616
Predecessor—For the period ended November 30, 2004	1,616	589	(772	)	1,433
From Inception (December 1) through December 31, 2004	1,433	135	(145	)	1,424

Reserve for inventory obsolence:	Balance at beginning of period	Additions	Deductions		Balance at end of period
Predecessor—For the year ended December 31, 2002	4,192	1,005	(802	)	4,394
Predecessor—For the year ended December 31, 2003	4,394	2,887	(1,309	)	5,972
Predecessor—For the period ended November 30, 2004	5,972	1,459	(1,954	)	5,478
From Inception (December 1) through December 31, 2004	5,478	545	(372	)	5,650

S-1

QuickLinks

ADDITIONAL REGISTRANTS
TABLE OF CONTENTS
PROSPECTUS SUMMARY
Summary of the Terms of the Exchange Offer
Summary of Terms of the Registered Notes
Risk Factors
RISK FACTORS
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
THE EXCHANGE OFFER
USE OF PROCEEDS
CAPITALIZATION
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
UNAUDITED PRO FORMA STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2004
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF INCOME (dollars in thousands)
SELECTED HISTORICAL FINANCIAL DATA
RATIO OF EARNINGS TO FIXED CHARGES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS
MANAGEMENT AND DIRECTORS
SUMMARY COMPENSATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
DESCRIPTION OF CERTAIN INDEBTEDNESS
DESCRIPTION OF NOTES
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
PLAN OF DISTRIBUTION
LEGAL MATTERS
EXPERTS
AVAILABLE INFORMATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
ALTRA INDUSTRIAL MOTION, INC. Consolidated Balance Sheets Dollars in thousands
ALTRA INDUSTRIAL MOTION, INC. Consolidated Statements of Operations and Comprehensive Income (Loss) Dollars in thousands
ALTRA INDUSTRIAL MOTION, INC. Consolidated Statements of Stockholder's Equity Dollars in thousands
ALTRA INDUSTRIAL MOTION, INC. Consolidated Statements of Cash Flows Dollars in thousands
ALTRA INDUSTRIAL MOTION, INC. Notes to Consolidated Financial Statements Dollars in thousands, unless otherwise noted

COMBINED STATEMENTS OF INCOME

COMBINED STATEMENTS OF CASH FLOWS

NOTES TO COMBINED FINANCIAL STATEMENTS KILIAN MANUFACTURING CORPORATION AND KILIAN CANADA ULC October 22, 2004, December 27, 2003 and February 14, 2003
Offer to exchange all outstanding $165,000,000 principal amount of 9% Senior Secured Notes due 2011 for $165,000,000 principal amount of 9% Senior Secured Notes due 2011 registered under the Securities Act of 1933
PART II: INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

ITEM 21. EXHIBITS.

ITEM 22. UNDERTAKINGS.

SIGNATURES
POWER OF ATTORNEY
SIGNATURES
POWER OF ATTORNEY
SIGNATURES
POWER OF ATTORNEY
SIGNATURES
POWER OF ATTORNEY
SIGNATURES
POWER OF ATTORNEY
SIGNATURES
POWER OF ATTORNEY
SIGNATURES
POWER OF ATTORNEY
SCHEDULE A
SCHEDULE B
EXHIBIT INDEX
EX-1.1 2 a2155511zex-1_1.htm EXHIBIT 1.1

Exhibit 1.1

EXECUTION DRAFT

$165,000,000

Altra Industrial Motion, Inc.

9% Senior Secured Notes due 2011

PURCHASE AGREEMENT

November 22, 2004

JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025

Ladies and Gentlemen:

Altra Industrial Motion, Inc., a Delaware corporation (the “Company”), and the Guarantors (as hereinafter defined) hereby agree with you as follows:

1. Issuance of Notes. Subject to the terms and conditions herein contained, the Company proposes to issue and sell to Jefferies & Company, Inc. (the “Initial Purchaser”) $165,000,000 aggregate principal amount of 9% Senior Secured Notes due 2011 (the “Notes”). The Notes will be issued pursuant to an indenture (the “Indenture”), to be dated as of November 30, 2004, by and among the Company, the Guarantors party thereto and The Bank of New York Trust Company, N.A., as trustee (the “Trustee”). Capitalized terms used, but not defined herein, shall have the meanings set forth in the “Description of the Notes” section of the Final Offering Circular (as hereinafter defined). The proceeds of the Notes will be used to finance the acquisition (the “Acquisition”) and related transactions, as described under “The Acquisition and Related Transactions” section of the Final Offering Circular (as defined below). Immediately prior to consummation of the Acquisition, affiliates of Genstar Capital, L.P. (“Genstar”) and other investors will make aggregate cash equity contributions and other investments (the “Equity Contribution and Other Investments”) of not less than $49,100,000 in the direct parent of the Company (“Parent”).

The Notes will be offered and sold to the Initial Purchaser pursuant to an exemption from the registration requirements under the Securities Act of 1933, as amended (the “Act”). Upon original issuance thereof, and until such time as the same are no longer required under the applicable requirements of the Act, the Notes shall bear the legends set forth under the “Notice to Investors” section of the Final Offering Circular, dated the date hereof (the “Final Offering Circular”). The Company has prepared a preliminary offering circular, dated November 9, 2004 (the “Preliminary Offering Circular”), and the Final Offering Circular relating to the offer and sale of the Notes (the “Offering”). “Offering Circular” means, as of any date or time referred to in this Agreement, the most recent offering circular (whether the Preliminary Offering Circular or the Final Offering Circular, and any amendment or supplement to either such document), including exhibits and schedules thereto.

In connection with the sale of the Notes, the Company will, on the Closing Date, enter into a new senior revolving credit facility among the Company, the other parties named therein and Wells Fargo Foothill, Inc., which provides for a revolving credit facility in an amount of up to $30,000,000 (as amended, supplemented, modified, extended or restated from time to time, the “Credit Agreement”).

2. Terms of Offering. The Initial Purchaser has advised the Company, and the Company understands, that the Initial Purchaser will make offers to sell (the “Exempt Resales”) some or all of the Notes purchased by the Initial Purchaser hereunder on the terms set forth in the Final Offering Circular, as amended or supplemented, to persons (the “Subsequent Purchasers”) whom the Initial Purchaser (i) reasonably believes to be “qualified institutional buyers” (“QIBs”) as defined in Rule 144A under the Act, as such may be amended from time to time, (ii) reasonably believes (based upon written representations made by such persons to the Initial Purchaser) to be institutional “accredited investors” as defined in Rule 501(a)(1), (2), (3) or (7) under the Act (“Accredited Investors”) or (iii) reasonably believes to be non-U.S. persons in reliance upon Regulation S under the Act.

Pursuant to the Indenture, all Domestic Restricted Subsidiaries of the Company shall fully and unconditionally guarantee, on a senior secured basis, to each holder of the Notes and the Trustee, the full performance of the Company’s obligations under the Indenture and the Notes (each such subsidiary being referred to herein as a “Guarantor” and each such guarantee being referred to herein as a “Guarantee”).

Pursuant to the terms of the Collateral Agreements, all of the obligations under the Notes and the Indenture will be secured by a second priority lien and security interest on substantially all of the assets of the Company and the Guarantors (subject to a prior ranking lien by the lenders under the Credit Agreement).

Holders of the Notes (including Subsequent Purchasers) will have the registration rights set forth in the registration rights agreement applicable to the Notes (the “Registration Rights Agreement”), to be executed on and dated as of the date hereof. Pursuant to the Registration Rights Agreement, the Company will agree, among other things, to file with the Securities and Exchange Commission (the “SEC”) (a) a registration statement under the Act relating to Senior Secured Notes (the “Exchange Notes”), which shall be identical to the Notes (except that the Exchange Notes shall have been registered pursuant to such registration statement and will not be subject to restrictions on transfer or contain additional interest provisions) to be offered in exchange for the Notes (such offer to exchange being referred to as the “Exchange Offer”), and/or (b) under certain circumstances, a shelf registration statement pursuant to Rule 415 under the Act (the “Shelf Registration Statement”) relating to the resale by certain holders of the Notes. If required under the Registration Rights Agreement, the Company will issue Exchange Notes to the Initial Purchaser (the “Private Exchange Notes”). If the Company fails to satisfy its obligations under the Registration Rights Agreement, it will be required to pay additional interest to the holders of the Notes under certain circumstances.

This Agreement, the Indenture, the Collateral Agreements, the Registration Rights Agreement, the Notes, the Guarantees, the Exchange Notes and the Private Exchange Notes are collectively referred to herein as the “Documents.”

3. Purchase, Sale and Delivery. On the basis of the representations, warranties, agreements and covenants herein contained and subject to the terms and conditions herein set forth, the Company agrees to issue and sell to the Initial Purchaser, and the Initial Purchaser agrees to purchase from the Company, the Notes at a purchase price of 96.7606% of the aggregate principal amount thereof. Delivery to the Initial Purchaser of and payment for the Notes shall be made at a Closing (the “Closing”)

to be held at 10:00 a.m., New York time, on November 30, 2004 (the “Closing Date”) at the New York offices of Weil, Gotshal & Manges LLP.

The Company shall deliver to the Initial Purchaser one or more certificates representing the Notes in definitive form, registered in such names and denominations as the Initial Purchaser may request, against payment by the Initial Purchaser of the purchase price therefor by immediately available Federal funds bank wire transfer to such bank account or accounts as the Company shall designate to the Initial Purchaser at least one business day prior to the Closing. The certificates representing the Notes in definitive form shall be made available to the Initial Purchaser for inspection at the New York offices of Weil, Gotshal & Manges LLP (or such other place as shall be reasonably acceptable to the Initial Purchaser) not later than 10:00 a.m. one business day immediately preceding the Closing Date. Notes to be represented by one or more definitive global securities in book-entry form will be deposited on the Closing Date, by or on behalf of the Company, with The Depository Trust Company (“DTC”) or its designated custodian, and registered in the name of Cede & Co.

4. Representations and Warranties of the Company and the Guarantors. The Company and the Guarantors jointly and severally represent and warrant to the Initial Purchaser that, as of the date hereof and as of the Closing Date:

(a) Neither the Preliminary Offering Circular, the Final Offering Circular, nor any amendment or supplement thereto, as of the date thereof and at all times subsequent thereto up to the Closing Date, contained or contains any untrue statement of a material fact, or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this Section 4(a) do not apply to statements or omissions made in reliance upon and in conformity with information relating to the Initial Purchaser and furnished to the Company in writing by the Initial Purchaser expressly for use in the Preliminary Offering Circular or the Final Offering Circular or any amendment or supplement thereto. No injunction or order has been issued that either (i) asserts that any of the transactions contemplated by the Documents is subject to the registration requirements of the Act or (ii) would prevent or suspend the issuance or sale of any of the Notes or the use of the Preliminary Offering Circular, the Final Offering Circular or any amendment or supplement thereto, in any jurisdiction. Each of the Preliminary Offering Circular and the Final Offering Circular, as of their respective dates, contained, and the Final Offering Circular, as amended or supplemented as of the Closing Date, will contain, all the information specified in, and meet the requirements of, Rule 144A(d)(4) under the Act.

(b) Each corporation, partnership or other entity in which the Company, directly or indirectly through any of its subsidiaries, owns more than fifty percent (50%) of any class of equity securities or interests is listed on Schedule I attached hereto (the “Subsidiaries”). Each Subsidiary that is a Foreign Restricted Subsidiary has an asterisk (“*”) next to its name on such schedule.

(c) Each of the Company and its Subsidiaries (i) has been duly organized or formed, as the case may be, is validly existing and is in good standing under the laws of its jurisdiction of organization, (ii) has all requisite power and authority to carry on its business as presently conducted and to own, lease and operate its properties and assets as presently owned, leased or operated and (iii) is duly qualified or licensed to do business and is in good standing as a foreign corporation, partnership or other entity, as the case may be, authorized to do business in each jurisdiction in which the nature of such business or the ownership or leasing of such properties requires such qualification, except where the failure to be so qualified would not, individually or in the aggregate, have a material adverse effect on (A) the properties, business, operations, earnings, assets, liabilities or condition (financial or otherwise) of the Company and the Subsidiaries, taken

as a whole, (B) the ability of the Company to perform its obligations in all material respects under any Document, (C) the enforceability of the Collateral Agreements or the attachment, perfection or priority of any of the Liens or security interests intended to be created thereby, (D) the validity or enforceability of any of the Documents or (E) the consummation of any of the transactions contemplated under any of the Documents (each, a “Material Adverse Effect”).

(d) All of the issued and outstanding shares of capital stock of or membership interests in, as the case may be, the Company and the Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable, and were not issued in violation of, and are not subject to, any preemptive or similar rights. The table under the caption “Capitalization” in the Final Offering Circular (including the footnotes thereto) sets forth, as of its date, the pro forma cash and cash equivalents and capitalization of the Company and the Subsidiaries, on a consolidated basis, after giving effect to the offer and sale of the Notes, the application of the net proceeds therefrom and the other transactions described in the Final Offering Circular under the section entitled “Use of Proceeds.” Except as set forth in such table, immediately following the Closing, neither the Company nor any of the Subsidiaries will have any liabilities, absolute, accrued, contingent or otherwise, other than (A) liabilities that are reflected in the Financial Statements (as hereinafter defined) or (B) liabilities incurred subsequent to the date thereof in the ordinary course of business, consistent with past practice, or in connection with the Acquisition and Related Transactions, that would not, individually or in the aggregate, have a Material Adverse Effect. All of the outstanding shares of capital stock or other equity interests of each of the Subsidiaries are owned, directly or indirectly, by the Company, free and clear of all liens, security interests, mortgages, pledges, charges, equities, claims or restrictions on transferability or encumbrances of any kind (collectively, “Liens”), other than those described in the Offering Circular, pursuant to the Credit Agreement or imposed by the Act and the securities or “Blue Sky” laws of certain domestic or foreign jurisdictions. Except as disclosed in the Offering Circular, there are no outstanding (A) options, warrants or other rights to purchase from the Company or any of the Subsidiaries, (B) agreements, contracts, arrangements or other obligations of the Company or any of the Subsidiaries to issue or (C) other rights to convert any obligation into or exchange any securities for, in the case of each of clauses (A) through (C), shares of capital stock of or other ownership or equity interests in the Company or any of the Subsidiaries.

(e) No holder of securities of the Company or any of the Subsidiaries will be entitled to have such securities registered under the registration statements required to be filed by the Company and the Guarantors with respect to the Notes pursuant to the Registration Rights Agreement.

(f) The Company and each of the Subsidiaries that are corporations have the requisite corporate power and authority, and the Company and each of the Subsidiaries that are limited partnerships or limited liability companies have all the requisite partnership or other power and authority, to execute, deliver and perform their respective obligations under the Documents to which they are a party and to consummate the transactions contemplated thereby.

(g) This Agreement has been duly and validly authorized, executed and delivered by the Company and the Guarantors. Each of the Indenture and the Collateral Agreements have been duly and validly authorized by the Company and the Guarantors. Each of the Indenture and the Collateral Agreements, when executed and delivered by the Company and the Guarantors, will constitute a legal, valid and binding obligation of each of the Company and Guarantors, enforceable against each of the Company and the Guarantors in accordance with its terms, except that the enforcement thereof may be subject to (i) bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to

creditors’ rights generally and (ii) general principles of equity (whether applied by a court of law or equity) and the discretion of the court before which any proceeding therefor may be brought.

(h) The Registration Rights Agreement has been duly and validly authorized by the Company and the Guarantors. The Registration Rights Agreement, when executed and delivered by the Company and the Guarantors, will constitute a legal, valid and binding obligation of the Company and the Guarantors, enforceable against the Company and the Guarantors in accordance with its terms, except that (A) the enforcement thereof may be subject to (i) bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) general principles of equity (whether applied by a court of law or equity) and the discretion of the court before which any proceeding therefor may be brought and (B) any rights to indemnity or contribution thereunder may be limited by federal and state securities laws and public policy considerations.

(i) The Notes, when issued, will be in the form contemplated by the Indenture. When executed and delivered by the Company and the Guarantors, the Indenture will meet the requirements for qualification under the Trust Indenture Act of 1939, as amended (the “TIA”). The Notes, Exchange Notes and Private Exchange Notes have each been duly and validly authorized by each of the Company and, in the case of the Notes, when delivered to and paid for by the Initial Purchaser in accordance with the terms of this Agreement and the Indenture, will have been duly executed, issued and delivered and will be legal, valid and binding obligations of the Company, entitled to the benefit of the Indenture, the Collateral Agreements and the Registration Rights Agreement, and enforceable against the Company in accordance with their terms, except that the enforcement thereof may be subject to (i) bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) general principles of equity (whether applied by a court of law or equity) and the discretion of the court before which any proceeding therefor may be brought.

(j) The Guarantees have been duly and validly authorized by the Guarantors and, when executed by the Guarantors, will have been duly executed, issued and delivered and will be legal, valid and binding obligations of the Guarantors, entitled to the benefit of the Indenture, the Collateral Agreements and the Registration Rights Agreement, and enforceable against the Guarantors in accordance with their terms, except that the enforcement thereof may be subject to (i) bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) general principles of equity (whether applied by a court of law or equity) and the discretion of the court before which any proceeding therefor may be brought.

(k) Neither the Company nor any of the Subsidiaries is in violation of its certificate of incorporation, by-laws or other organizational documents (the “Charter Documents”). Neither the Company nor any of the Subsidiaries is (i) in violation of any Federal, state, local or foreign statute, law (including, without limitation, common law) or ordinance, or any judgment, decree, rule, regulation or order (collectively, “Applicable Law”) of any federal, state, local and other governmental authority, governmental or regulatory agency or body, court, arbitrator or self-regulatory organization, domestic or foreign (each, a “Governmental Authority”) applicable to any of them or any of their respective properties, or (ii) in breach of or default under any bond, debenture, note or other evidence of indebtedness, indenture, mortgage, deed of trust, lease or any other agreement or instrument to which any of them is a party or by which any of them or their respective property is bound (collectively, “Applicable Agreements”), except for such violations, breaches or defaults that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company, there exists no condition

that, with the passage of time or otherwise, would constitute (a) a violation of such Charter Documents or Applicable Laws, (b) a breach of or default under any Applicable Agreement or (c) result in the imposition of any penalty or the acceleration of any indebtedness.

(l) Neither the execution, delivery or performance of the Documents nor the consummation of any transactions contemplated therein will conflict with, violate, constitute a breach of or a default (with the passage of time or otherwise) under, require the consent of any person (other than consents already obtained and in full force and effect) under, result in the imposition of a Lien on any assets of the Company or any of its Subsidiaries (except for Liens pursuant to the Collateral Agreements), or result in an acceleration of indebtedness under or pursuant to (i) the Charter Documents, (ii) any Applicable Agreement or (iii) any Applicable Law, except for, with respect to clauses (ii) and (iii), any conflict, violation, breach or default that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. After consummation of the Offering and transactions contemplated in the Documents, no Default or Event of Default under the Indenture will exist.

(m) When executed and delivered, the Documents will conform in all material respects to the descriptions thereof in the Final Offering Circular.

(n) No consent, approval, authorization or order of any Governmental Authority or third party is required for the issuance and sale by the Company of the Notes to the Initial Purchaser or the consummation by the Company of the other transactions contemplated hereby, except such as have been obtained and such as may be required under state securities or “Blue Sky” laws in connection with the purchase and resale of the Notes by the Initial Purchaser and such as may be required in connection with the Exchange Offer or Shelf Registration Statement.

(o) There is no action, claim, suit, demand, hearing, notice of violation or deficiency, or proceeding, domestic or foreign (collectively, “Proceedings”), pending or, to the knowledge of the Company, threatened, that either (i) seeks to restrain, enjoin, prevent the consummation of or otherwise challenge any of the Documents or any of the transactions contemplated therein or (ii) would, individually or in the aggregate, have a Material Adverse Effect. The Company is not subject to any judgment, order, decree, rule or regulation of any Governmental Authority that would, individually or in the aggregate, have a Material Adverse Effect.

(p) The Company and its Subsidiaries possess all licenses, permits, certificates, consents, orders, approvals and other authorizations from, and has made all declarations and filings with, all Governmental Authorities presently required or necessary to own or lease, as the case may be, and to operate their respective properties and to carry on their respective businesses as now or proposed to be conducted as set forth in the Final Offering Circular (“Permits”), except where the failure to obtain such Permits would not, individually or in the aggregate, have a Material Adverse Effect; each of the Company and its Subsidiaries has fulfilled and performed all of its obligations with respect to such Permits and no event has occurred that allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other material impairment of the rights of the holder of any such Permit that would, individually or in the aggregate, have a Material Adverse Effect; and none of the Company or its Subsidiaries has received any notice of any proceeding relating to revocation or modification of any such Permit, except as described in the Final Offering Circular or except where such revocation or modification would not, individually or in the aggregate, have a Material Adverse Effect.

(q) Each of the Company and its Subsidiaries has good and indefeasible title to all real property owned by it and good title to all personal property owned by it and good title to all leasehold

estates in real and personal property being leased by it and, as of the Closing Date, all such owned or leased real or personal property will be free and clear of all Liens (other than Permitted Liens). All Applicable Agreements to which the Company or any of its Subsidiaries is a party or by which any of them is bound are valid and enforceable against each of the Company or such Subsidiary, as applicable, and are valid and enforceable against the other party or parties thereto and are in full force and effect with only such exceptions as would not, individually or in the aggregate, have a Material Adverse Effect.

(r) All Tax returns required to be filed by the Company and each of the Subsidiaries have been filed and all such returns are true, complete and correct in all material respects. All material Taxes that are due from the Company and its Subsidiaries have been paid other than those (i) currently payable without penalty or interest or (ii) being contested in good faith and by appropriate proceedings and for which adequate reserves have been established in accordance with generally accepted accounting principles of the United States, consistently applied (“GAAP”). To the knowledge of the Company, after reasonable inquiry, there are no actual or proposed Tax assessments against the Company or any of the Subsidiaries that would, individually or in the aggregate, have a Material Adverse Effect. The accruals and reserves on the books and records of the Company and its Subsidiaries in respect of any material Tax liability for any period not finally determined are adequate to meet any assessments of Tax for any such period. For purposes of this Agreement, the term “Tax” and “Taxes” shall mean all Federal, state, local and foreign taxes, and other assessments of a similar nature (whether imposed directly or through withholding), including any interest, additions to tax or penalties applicable thereto.

(s) Except as disclosed in the Offering Circular, each of the Company and the Subsidiaries owns, or is licensed under, and has the right to use, all patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names (collectively, “Intellectual Property”) necessary for the conduct of its business and, as of the Closing Date, such Intellectual Property will be free and clear of all Liens, other than Permitted Liens. No claims or notices of any potential claim have been asserted by any person challenging the use of any such Intellectual Property by the Company or any of the Subsidiaries or questioning the validity or effectiveness of the Intellectual Property or any license or agreement related thereto (other than any claims that would not, individually or in the aggregate, have a Material Adverse Effect). The use of such Intellectual Property by the Company or any of the Subsidiaries will not infringe on the Intellectual Property rights of any other person.

(t) The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) material transactions are executed in accordance with management’s general or specific authorization, (ii) material transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any material differences.

(u) The audited combined financial statements and related notes of the power transmission business of Colfax Corporation to be acquired by the Company pursuant to the Acquisition (the “Business”) contained in the Final Offering Circular (the “Colfax PT Financial Statements”) present fairly the combined financial position, results of operations and cash flows of such Business as of the respective dates and for the respective periods to which they apply and have been prepared in accordance with GAAP and the requirements of Regulation S-X of the Act. The combined financial statements and related notes of the Kilian Manufacturing Corporation and

Kilian Manufacturing Ltd. (together, “Kilian”) contained in the Final Offering Circular (the “Kilian Financial Statements” and, together with the Colfax PT Financial Statements, the “Financial Statements”) present fairly the financial position, results of operations and cash flows of Kilian as of the respective dates and for the respective periods to which they apply. The financial data set forth under “Summary Historical and Pro Forma Combined Financial Data” and “Selected Historical Combined Financial Data” included in the Final Offering Circular has been prepared on a basis consistent with that of the Financial Statements and present fairly the financial position and results of operations of the Business and Kilian as of the respective dates and for the respective periods indicated. The unaudited pro forma condensed combined financial statements and related notes contained in the Final Offering Circular have been prepared in accordance with the requirements of Regulation S-X and give effect to assumptions used in the preparation thereof on a reasonable basis and in good faith. All other financial, statistical and market and industry-related data included in the Final Offering Circular are fairly and accurately presented and are based on or derived from sources that the Company believes to be reliable and accurate.

(v) Subsequent to the respective dates as of which information is given in the Final Offering Circular, except as disclosed in the Final Offering Circular, (i) neither the Company nor any of the Subsidiaries has incurred any liabilities, direct or contingent, that are material, individually or in the aggregate, to the Company, or has entered into any transactions not in the ordinary course of business, (ii) there has not been any material decrease in the capital stock or any material increase in long-term indebtedness or any material increase in short-term indebtedness of the Company, or any payment of or declaration to pay any dividends or any other distribution with respect to the Company, and (iii) there has not been any material adverse change in the properties, business, operations, earnings, assets, liabilities or condition (financial or otherwise) of the Company and the Subsidiaries taken as a whole in the aggregate (each of clauses (i), (ii) and (iii), a “Material Adverse Change”). To the knowledge of the Company, after reasonable inquiry, there is no event that is reasonably likely to occur, which would, individually or in the aggregate, have a Material Adverse Effect except as disclosed in the Final Offering Circular.

(w) No “nationally recognized statistical rating organization” (as such term is defined for purposes of Rule 436(g)(2) under the Act) (i) has imposed (or has informed the Company that it is considering imposing) any condition (financial or otherwise) on the Company retaining any rating assigned to the Company or any of the Subsidiaries or to any securities of the Company or any of the Subsidiaries or (ii) has indicated to the Company that it is considering (A) the downgrading, suspension or withdrawal of, or any review for a possible change that does not indicate the direction of the possible change in, any rating so assigned, or (B) any negative change in the outlook for any rating of the Company or any of the Subsidiaries or any securities of the Company or any of the Subsidiaries.

(x) All indebtedness represented by the Notes is being incurred in good faith and for the purposes set forth in the “Use of Proceeds” section of the Offering Circular. On the Closing Date, after giving pro forma effect to the Offering and the use of proceeds therefrom as indicated in the “Use of Proceeds” section of the Offering Circular, the Company and each Guarantor (i) will be solvent, (ii) will have sufficient capital for carrying on its business and (iii) will be able to pay its debts as they mature. As used in this paragraph, the term “Solvent” means, with respect to a particular date, that on such date (i) the present fair market value (or present fair saleable value) of the assets of the Company and each Guarantor is not less than the total amount required to pay the liabilities of the Company and each Guarantor on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured; (ii) the Company and each Guarantor is able to pay its debts and other liabilities, contingent obligations and commitments as they

mature and become due in the normal course of business; (iii) assuming consummation of the issuance of the Notes and Guarantees as contemplated by this Agreement and the Offering Circular, neither the Company nor any Subsidiary is incurring debts or liabilities beyond its ability to pay as such debts and liabilities mature; (iv) neither the Company nor any Subsidiary is engaged in any business or transaction, and does not propose to engage in any business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which the Company or any Guarantor is engaged; and (v) neither the Company nor any Guarantor is otherwise insolvent under the standards set forth in applicable laws.

(y) The Company has not and, to its knowledge after reasonable inquiry, no one acting on its behalf (excluding for such purposes, the Initial Purchaser) has, (i) taken, directly or indirectly, any action designed to cause or to result in, or that has constituted or that might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Notes, (ii) sold, bid for, purchased or paid anyone any compensation for soliciting purchases of any of the Notes or (iii) except as disclosed in the Final Offering Circular, paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company.

(z) Assuming the accuracy of the representations contained in Section 6 hereof, without limiting any provision herein, no registration under the Act and no qualification of the Indenture under the TIA is required for the sale of the Notes to the Initial Purchaser as contemplated hereby or for the Exempt Resales, assuming (i) that the purchasers in the Exempt Resales are QIBs or Accredited Investors or non-U.S. persons (as defined under Regulation S of the Act) and (ii) the accuracy of the Initial Purchaser’s representations contained herein regarding the absence of general solicitation in connection with the sale of the Notes to the Initial Purchaser and in the Exempt Resales.

(aa) Assuming the accuracy of the representations contained in Section 6 hereof, the Notes are eligible for resale pursuant to Rule 144A under the Act and no other securities of the Company are of the same class (within the meaning of Rule 144A under the Act) as the Notes and listed on a national securities exchange registered under Section 6 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or quoted in a U.S. automated inter-dealer quotation system. No securities of the Company of the same class as the Notes have been offered, issued or sold by the Company or any of its respective Affiliates within the six-month period immediately prior to the date hereof.

(bb) Neither of the Company nor any of its Affiliates or other person acting on behalf of the Company (excluding for such purposes, the Initial Purchaser) has offered or sold the Notes by means of any general solicitation or general advertising within the meaning of Rule 502(c) under the Act or, with respect to Notes sold outside the United States to non-U.S. persons (as defined in Rule 902 under the Act), by means of any directed selling efforts within the meaning of Rule 902 under the Act, and the Company, any affiliate of the Company and any person acting on behalf of the Company have complied with and will implement the “offering restrictions” within the meaning of such Rule 902; provided, that no representation is made in this subsection with respect to the actions of the Initial Purchaser.

(cc) Except as disclosed in the Offering Circular, each of the Company, the Subsidiaries and each ERISA Affiliate has fulfilled its obligations, if any, under the minimum funding standards of Section 302 of the United States Employee Retirement Income Security Act of 1974, as amended (“ERISA”), with respect to each “pension plan” (as defined in Section 3(2) of ERISA) subject to

Section 302 of ERISA that the Company, the Subsidiaries or any ERISA Affiliate sponsors or maintains, or with respect to which it has (or within the last three years had) any obligation to make contributions, and each such plan is in compliance in all material respects with the presently applicable provisions of ERISA and the Internal Revenue Code of 1986, as amended (the “Code”). Except as disclosed in the Offering Circular, neither the Company, the Subsidiaries, nor any ERISA Affiliate has incurred any unpaid liability to the Pension Benefit Guaranty Corporation (other than for the payment of premiums in the ordinary course) or to any such plan under Title IV of ERISA. “ERISA Affiliate” means a corporation, trade or business that is, along with the Company or any Subsidiary, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in Section 414 of the Code or Section 4001 of ERISA.

(dd) Other than as disclosed in the Offering Circular, (i) neither the Company nor any of the Subsidiaries is party to or bound by any collective bargaining agreement with any labor organization; (ii) none of the employees of the Company or the Subsidiaries is represented by a labor union, and, to the knowledge of the Company after reasonable inquiry, no union organizing activities are taking place that could, individually or in the aggregate, have a Material Adverse Effect; (iii) to the Company’s knowledge, no union organizing or decertification efforts are underway or threatened against the Company or the Subsidiaries; (iv) no labor strike, work stoppage, slowdown or other material labor dispute is pending against the Company or the Subsidiaries, or, to the knowledge of the Company, after reasonable inquiry, threatened against the Company or the Subsidiaries; (v) there is no worker’s compensation liability, experience or matter that could be reasonably expected to have a Material Adverse Effect; (vi) to the knowledge of the Company, after reasonable inquiry, there is no threatened or pending liability against the Company or the Subsidiaries pursuant to the Worker Adjustment Retraining and Notification Act of 1988, as amended (“WARN”), or any similar state or local law; (vii) there is no employment-related charge, complaint, grievance, investigation, unfair labor practice claim or inquiry of any kind pending against the Company or the Subsidiaries that could, individually or in the aggregate, have a Material Adverse Effect; (viii) to the knowledge of the Company, after reasonable inquiry, no employee or agent of the Company or the Subsidiaries has committed any act or omission giving rise to liability for any violation identified in subsection (vi) and (vii) above, other than such acts or omissions that would not, individually or in the aggregate, have a Material Adverse Effect; and (ix) no term or condition of employment exists through arbitration awards, settlement agreements, or side agreement that is contrary to the express terms of any applicable collective bargaining agreement.

(ee) None of the transactions contemplated in the Documents or the application by the Company or any of the Subsidiaries of the proceeds of the Notes will violate or result in a violation of Section 7 of the Exchange Act (including, without limitation, Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal Reserve System).

(ff) Neither the Company nor any of the Subsidiaries is an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the United States Investment Company Act of 1940 (the “Investment Company Act”); and neither the Company nor any of the Subsidiaries, after giving effect to the Offering and sale of the Notes and the application of the proceeds thereof as described in the Final Offering Circular, will be an “investment company” as defined in the Investment Company Act.

(gg) The Company has not engaged any broker, finder, commission agent or other person (other than the Initial Purchaser) in connection with the Offering or any of the transactions contemplated in

the Documents, and the Company is not under any obligation to pay any broker’s fee or commission in connection with such transactions (other than commissions or fees to the Initial Purchaser and the Management Agreement with Genstar).

(hh) Each of the Company and the Subsidiaries is (i) in compliance with any and all applicable foreign, provincial, federal, state and local laws and regulations relating to health and safety, or the pollution or the protection of the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) has received and is in compliance with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct its respective businesses and (iii) has not received notice of, and is not aware of, any actual or potential liability for damages to natural resources or the investigation or remediation of any disposal, release or existence of hazardous or toxic substances or wastes, pollutants or contaminants, in each case except where such non-compliance with Environmental Laws, failure to receive and comply with required permits, licenses or other approvals, or liability would not, individually or in the aggregate, have a Material Adverse Effect. Neither the Company nor any of the Subsidiaries has been named as a “potentially responsible party” under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or any similar state or local or foreign or provincial Environmental Laws or regulations requiring the Company or any of its Subsidiaries to investigate or remediate any pollutants or contaminants, except where such requirements would not, individually or in the aggregate, have a Material Adverse Effect, whether or not arising from transactions in the ordinary course of business.

In connection with the Acquisition and Related Transaction, the Company reviewed the effects of Environmental Laws on the business, operations and properties of the Company and the Subsidiaries, and has identified and evaluated associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws, or any permit arising from the Company’s or its Subsidiaries’ or any predecessors’ or formerly owned or operated properties or license or approval, any related constraints on operating activities and any potential liabilities, to third parties). Based on such review and the indemnification for certain costs and liabilities that the Company or its Subsidiaries reasonably expect to receive from the Company’s former parent company, the Company has reasonably concluded that such associated costs and liabilities would not, individually or in the aggregate, have a Material Adverse Effect on the Company’s business, operations or earnings.

(ii) As of the Closing Date, except as provided in the Credit Agreement and as disclosed in the Final Offering Circular, there will be no encumbrances or restrictions (other than under applicable law) on the ability of any Subsidiary of the Company (x) to pay dividends or make other distributions on such Subsidiary’s capital stock or to pay any indebtedness to the Company or any other Subsidiary of the Company, (y) to make loans or advances or pay any indebtedness to, or investments in, the Company or any other Subsidiary of the Company or (z) to transfer any of its property or assets to the Company or any other Subsidiary of the Company.

(jj) (a) Upon:

(i) execution and delivery of the Collateral Agreements by the Company and the Guarantors parties thereto and the Collateral Agent (as defined therein) and compliance by the Company and the Guarantors with their respective obligations thereunder; and

(ii) (A) the filing or recording of the Collateral Agreements or appropriate financing statements with the appropriate filing records, registry or other public office, together with the payment of the requisite filing or recordation fees related thereto, and

(B) in the case of Motor Vehicles (as defined in the Security Agreement), upon the recordation or notation of the Collateral Agent’s security interest on the certificates of title or ownership in respect of such Motor Vehicles and the filing of the Uniform Commercial Code financing statements delivered by the Company or any Guarantor, as the case may be, having an interest in such Motor Vehicles to the Collateral Agent with respect to such Motor Vehicles,

the security interest of the Collateral Agent in the Collateral (as defined in the Collateral Agreements) will be a valid and enforceable perfected security interest, which security interests will be superior to and prior to the rights of all third persons other than holders of Permitted Liens.

(b) As of the Closing Date, except with respect to Permitted Liens, there will be no currently effective financing statement, security agreement, chattel mortgage, real estate mortgage or other document filed or recorded with any filing records, registry or other public office, that purports to cover, affect or give notice of any present or possible future Lien on, or security interest in, any assets or property of the Company or any Guarantor or any rights thereunder.

(kk) Each certificate signed by any officer of the Company, or any Subsidiary thereof, delivered to the Initial Purchaser shall be deemed a representation and warranty by the Company or any such Subsidiary thereof (and not individually by such officer) to the Initial Purchaser with respect to the matters covered thereby.

(ll) Each of the Company and its Subsidiaries is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged. All policies of insurance insuring the Company or any of its Subsidiaries or their respective businesses, assets, employees, officers and directors are in full force and effect. The Company and the Subsidiaries are in compliance with the terms of such policies and instruments in all material respects, and there are no claims by the Company or any of the Subsidiaries under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not, individually or in the aggregate, have a Material Adverse Effect.

(mm) Set forth on Schedule II hereto is a list of all Indebtedness that is to be paid in full using the proceeds of the Offering and terminated, retired or redeemed, as applicable, on the Closing Date. Set forth on Schedule II opposite the description of each such Indebtedness is the aggregate principal amount of Indebtedness outstanding thereunder.

5. Covenants of the Company and the Guarantors. Each of the Company and the Guarantors jointly and severally agrees:

(a) To (i) advise the Initial Purchaser promptly after obtaining knowledge (and, if requested by the Initial Purchaser, confirm such advice in writing) of (A) the issuance by any state securities commission of any stop order suspending the qualification or exemption from qualification of any of the Notes for offer or sale in any jurisdiction, or the initiation of any proceeding for such purpose by any state securities commission or other regulatory authority, or (B) the happening of any event that makes any statement of a material fact made in the Final Offering Circular untrue or that requires the making of any additions to or changes in the Final Offering Circular in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, (ii) use its reasonable best efforts to prevent the issuance of any stop order or order suspending the qualification or exemption from qualification of any of the Notes under any state securities or Blue Sky laws, and (iii) if, at any time, any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of any of the Notes under any such laws, use its reasonable best efforts to obtain the withdrawal or lifting of such order at the earliest possible time.

(b) To (i) furnish the Initial Purchaser, without charge, with as many copies of the Final Offering Circular, and any amendments or supplements thereto, as the Initial Purchaser may reasonably request, and (ii) promptly prepare, upon the Initial Purchaser’s reasonable request, any amendment or supplement to the Offering Circular that the Initial Purchaser, upon advice of legal counsel, determines may be necessary in connection with Exempt Resales (and the Company hereby consents to the use of the Preliminary Offering Circular and the Final Offering Circular, and any amendments and supplements thereto, by the Initial Purchaser in connection with Exempt Resales).

(c) Not to amend or supplement the Offering Circular prior to the Closing Date, or at any time prior to the completion of the resale by the Initial Purchaser of all the Notes purchased by the Initial Purchaser, unless the Initial Purchaser shall previously have been advised thereof and shall have provided its written consent thereto.

(d) So long as the Initial Purchaser shall hold any of the Notes, (i) if any event shall occur as a result of which, in the reasonable judgment of the Company or the Initial Purchaser, it becomes necessary or advisable to amend or supplement the Final Offering Circular in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary to amend or supplement the Final Offering Circular to comply with Applicable Law, to prepare, at the expense of the Company, an appropriate amendment or supplement to the Final Offering Circular (in form and substance reasonably satisfactory to the Initial Purchaser) so that (A) as so amended or supplemented, the Final Offering Circular will not include an untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (B) the Final Offering Circular will comply with Applicable Law and (ii) if in the reasonable judgment of the Company it becomes necessary or advisable to amend or supplement the Final Offering Circular so that the Final Offering Circular will contain all of the information specified in, and meet the requirements of, Rule 144A(d)(4) of the Act, to prepare an appropriate amendment or supplement to the Final Offering Circular (in form and substance reasonably satisfactory to the Initial Purchaser) so that the Final Offering Circular, as so amended or supplemented, will contain the information specified in, and meet the requirements of, such Rule.

(e) To cooperate with the Initial Purchaser and the Initial Purchaser’s counsel in connection with the qualification of the Notes under the securities or Blue Sky laws of such jurisdictions as the Initial Purchaser may request and continue such qualification in effect so long as reasonably required for Exempt Resales.

(f) Whether or not any of the Offering or the transactions contemplated under the Documents are consummated or this Agreement is terminated, to pay (i) all costs, expenses, fees and taxes incident to and in connection with: (A) the preparation, printing and distribution of the Preliminary Offering Circular and the Final Offering Circular and all amendments and supplements thereto (including, without limitation, financial statements and exhibits), and all other agreements, memoranda, correspondence and other documents prepared and delivered in connection herewith, (B) the negotiation, printing, processing and distribution (including, without limitation, word processing and duplication costs) and delivery of, each of the Documents, (C) the preparation, issuance and delivery of the Notes, (D) the qualification of the Notes for offer and sale under the securities or Blue Sky laws of the several states (including, without limitation, the fees and disbursements of the Initial Purchaser’s counsel relating to such registration or qualification), (E) furnishing such copies of the Preliminary Offering Circular and the Final Offering Circular, and all amendments and supplements thereto, as may reasonably be requested for use by the Initial Purchaser and (F) the performance of the obligations of the Company and the Guarantors under the Registration Rights Agreement, including but not limited to the Exchange Offer, the Exchange Offer Registration Statement and any Shelf Registration Statement, (ii) all fees and expenses of the counsel, accountants and any other experts or advisors retained by the Company, (iii) all expenses and listing fees in connection with the application for quotation of the Notes on the Private Offerings, Resales and Trading Automated Linkages (“PORTAL”) market, (iv) all fees and expenses (including fees and expenses of counsel) of the Company in connection with approval of the Notes by DTC for “book-entry” transfer, (v) all fees charged by rating agencies in connection with the rating of the Notes, (vi) all fees and expenses (including reasonable fees and expenses of counsel) of the Trustee and all collateral agents, (vii) all costs and expenses in connection with the perfection of the Security Agreement (including without limitation, filing and recording fees, search fees, taxes and costs of title policies) and (viii) up to $250,000 of the fees, disbursements and out-of-pocket expenses incurred by the Initial Purchaser in connection with its services to be rendered hereunder including, without limitation, the reasonable fees and disbursements of Proskauer Rose LLP, counsel to the Initial Purchaser, travel and lodging expenses, word processing charges, messenger and duplicating services, facsimile expenses and other customary expenditures. If the sale of the Notes provided for herein is not consummated because any condition to the obligations of the Initial Purchaser set forth in Section 7 hereof is not satisfied, because this Agreement is terminated pursuant to Section 9 hereof or because of any failure, refusal or inability on the part of the Company to perform all obligations and satisfy all conditions on its part to be performed or satisfied hereunder (other than in each such case solely by reason of a default by the Initial Purchaser on its obligations hereunder after all conditions hereunder have been satisfied in accordance herewith), the Company agrees to promptly reimburse the Initial Purchaser in cash upon demand for up to $250,000 of the fees, disbursements and out-of-pocket expenses (including reasonable fees and disbursements of Proskauer Rose LLP, counsel for the Initial Purchaser) that shall have been incurred by the Initial Purchaser in connection with the proposed purchase and sale of the Notes.

(g) To use the proceeds of the Offering in the manner described in the Final Offering Circular under the caption “Use of Proceeds.”

(h) To do and perform all things required to be done and performed under the Documents prior to and after the Closing Date.

(i) Not to, and to ensure that no affiliate (as defined in Rule 501(b) of the Act) of the Company will, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any “security” (as defined in the Act) that would be integrated with the sale of the Notes in a manner that would

require the registration under the Act of the sale to the Initial Purchaser or to the Subsequent Purchasers of the Notes.

(j) For so long as any of the Notes remain outstanding, during any period in which the Company is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request, to any owner of the Notes in connection with any sale thereof and any prospective Subsequent Purchasers of such Notes from such owner, the information required by Rule 144A(d)(4) under the Act.

(k) To comply with the representation letter of the Company to DTC relating to the approval of the Notes by DTC for “book entry” transfer.

(l) To use its best efforts to effect the inclusion of the Notes in Private Offerings, Resales and Trading through Automated Linkages Market.

(m) For so long as any of the Notes remain outstanding, the Company will furnish to the Initial Purchaser copies of all reports and other communications (financial or otherwise) furnished by the Company to the Trustee or to the holders of the Notes and, as soon as available, copies of any reports or financial statements furnished to or filed by the Company with the SEC or any national securities exchange on which any class of securities of the Company may be listed.

(n) Except in connection with the Exchange Offer or the filing of the Shelf Registration Statement, not to, and not to authorize or permit any person acting on its behalf to, (i) distribute any offering material in connection with the offer and sale of the Notes other than the Preliminary Offering Circular and the Final Offering Circular and any amendments and supplements to the Final Offering Circular prepared in compliance with this Agreement, or (ii) solicit any offer to buy or offer to sell the Notes by means of any form of general solicitation or general advertising (including, without limitation, as such terms are used in Regulation D under the Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Act.

(o) During the two year period after the Closing Date (or such shorter period as may be provided for in Rule 144(k) under the Act, as the same may be in effect from time to time), to not, and to not permit any current or future Subsidiaries of either the Company or any other affiliates (as defined in Rule 144A under the Act) controlled by the Company to, resell any of the Notes which constitute “restricted securities” under Rule 144 that have been reacquired by the Company, any current or future Subsidiaries or any other “affiliates” (as defined in Rule 144A under the Act) controlled by the Company, except pursuant to an effective registration statement under the Act.

(p) The Company shall pay all stamp, documentary and transfer taxes and other duties, if any, which may be imposed by the United States or any political subdivision thereof or taxing authority thereof or therein with respect to the issuance of the Notes or the sale thereof to the Initial Purchaser.

(q) To use their best efforts to complete on or prior to the Closing Date all filings and other similar actions required in connection with the perfection of security interests as and to the extent contemplated by the Collateral Agreements.

(r) To cause each of the Subsidiaries to execute counterparts of this Agreement in the form attached as Exhibit B hereto.

6. Representations and Warranties of the Initial Purchaser. The Initial Purchaser represents and warrants that:

(a) It is a QIB as defined in Rule 144A under the Act and it will offer the Notes for resale only upon the terms and conditions set forth in this Agreement and in the Final Offering Circular.

(b) It is not acquiring the Notes with a view to any distribution thereof that would violate the Act or the securities laws of any state of the United States or any other applicable jurisdiction. In connection with the Exempt Resales, it will solicit offers to buy the Notes only from, and will offer and sell the Notes only to, (A) persons reasonably believed by the Initial Purchaser to be QIBs or (B) persons reasonably believed by the Initial Purchaser to be Accredited Investors or (C) non-U.S. persons reasonably believed by the Initial Purchaser to be a purchaser referred to in Regulation S under the Act; provided, however, that in purchasing such Notes, such persons are deemed to have represented and agreed as provided under the caption “Notice to Investors” contained in the Final Offering Circular.

(c) No form of general solicitation or general advertising in violation of the Act has been or will be used nor will any offers in any manner involving a public offering within the meaning of Section 4(2) of the Act or, with respect to Notes to be sold in reliance on Regulation S, by means of any directed selling efforts be made by such Initial Purchaser or any of its representatives in connection with the offer and sale of any of the Notes.

(d) The Initial Purchaser will deliver to each Subsequent Purchaser of the Notes, in connection with its original distribution of the Notes, a copy of the Final Offering Circular, as amended and supplemented at the date of such delivery.

7. Conditions. The obligations of the Initial Purchaser to purchase the Notes under this Agreement are subject to the performance by each of the Company and the Guarantors of their respective covenants and obligations hereunder and the satisfaction of each of the following conditions:

(a) All the representations and warranties of the Company and the Subsidiaries contained in this Agreement and in each of the Documents shall be true and correct in all material respects as of the date hereof and at the Closing Date. On or prior to the Closing Date, the Company and each other party to the Documents (other than the Initial Purchaser) shall have performed or complied with all of the agreements and satisfied all conditions on their respective parts to be performed, complied with or satisfied pursuant to the Documents (other than conditions to be satisfied by such other parties, which the failure to so satisfy would not, individually or in the aggregate, have a Material Adverse Effect).

(b) No injunction, restraining order or order of any nature by a Governmental Authority shall have been issued as of the Closing Date that would prevent or materially interfere with the consummation of the Offering or any of the transactions contemplated under the Documents; and no stop order suspending the qualification or exemption from qualification of any of the Notes in any jurisdiction shall have been issued and no Proceeding for that purpose shall have been commenced or, to the knowledge of the Company, after reasonable inquiry, be pending as of the Closing Date.

(c) No action shall have been taken and no Applicable Law shall have been enacted, adopted or issued that would, as of the Closing Date, prevent the consummation of the Offering or any of the transactions contemplated under the Documents. No Proceeding shall be pending or, to the knowledge of the Company after reasonable inquiry, threatened other than Proceedings that (A) if

adversely determined would not, individually or in the aggregate, adversely affect the issuance or marketability of the Notes, and (B) would not, individually or in the aggregate, have a Material Adverse Effect.

(d) Subsequent to the respective dates as of which data and information is given in the Final Offering Circular, there shall not have been any Material Adverse Change.

(e) The Notes shall have been designated PORTAL securities in accordance with the rules and regulations adopted by the National Association of Securities Dealers, Inc. relating to trading in The PORTAL Market.

(f) On or after the date hereof and on or prior to the Closing Date, (i) there shall not have occurred any downgrading, suspension or withdrawal of, nor shall any notice have been given of any potential or intended downgrading, suspension or withdrawal of, or of any review (or of any potential or intended review) for a possible change that does not indicate the direction of the possible change in, any rating of the Company or any securities of the Company (including, without limitation, the placing of any of the foregoing ratings on credit watch with negative or developing implications or under review with an uncertain direction) by any “nationally recognized statistical rating organization” as such term is defined for purposes of Rule 436(g)(2) under the Act, (ii) there shall not have occurred any negative change, nor shall any notice have been given of any potential or intended negative change, in the outlook for any rating of the Company or any securities of the Company by any such rating organization and (iii) no such rating organization shall have given notice that it has assigned (or is considering assigning) a lower rating to the Notes than that on which the Notes were marketed.

(g) The Initial Purchaser shall have received on the Closing Date:

(i) certificates dated the Closing Date, signed by (1) the Chief Executive Officer and (2) the principal financial or accounting officer of the Company, on behalf of the Company, to the effect that (a) the representations and warranties set forth in Section 4 hereof and in each of the Documents are true and correct in all material respects with the same force and effect as though expressly made at and as of the Closing Date, (b) the Company has performed and complied in all material respects with all agreements and satisfied in all material respects all conditions in all material respects on its part to be performed or satisfied by the Company at or prior to the Closing Date, (c) at the Closing Date, since the date hereof or since the date of the most recent financial statements in the Final Offering Circular (exclusive of any amendment or supplement thereto after the date hereof), to the knowledge of such officers, no event or events have occurred, no information has become known nor does any condition exist that, individually or in the aggregate, would have a Material Adverse Effect, (d) since the date of the most recent financial statements in the Final Offering Circular (exclusive of any amendment or supplement thereto after the date hereof), other than as described in the Final Offering Circular or contemplated hereby, neither the Company nor any Subsidiary of the Company has incurred any liabilities or obligations, direct or contingent, not in the ordinary course of business, that are material to the Company and the Subsidiaries, taken as a whole, or entered into any transactions not in the ordinary course of business that are material to the business, condition (financial or otherwise) or results of operations or prospects of the Company and the Subsidiaries, taken as a whole, and there has not been any change in the capital stock or long-term indebtedness of the Company or any Subsidiary of the Company that is material to the business, condition (financial or otherwise) or results of operations or prospects of the Company and the Subsidiaries,

taken as a whole, and (e) the sale of the Notes has not been enjoined (temporarily or permanently);

(ii) certificate dated the Closing Date, signed by an Executive Officer of the Company, on behalf of the Company, to the effect that the combined pro forma Adjusted EBITDA of the Business for the most recent twelve-month period (as set forth in the footnotes to the “Summary Historical and Pro Forma Combined Financial Data” section of the Offering Circular) (a) was not less than $27.5 million, (b) presents fairly the financial position, results of operations and cash flows of the Company and its consolidated Subsidiaries after giving pro forma effect to the Acquisition and Related Transactions, and (c) has been prepared in accordance with the requirements of Rule 11-02 of Regulation S-X and give effect to assumptions used in the preparation therof on a reasonable basis and in good faith;

(iii) a certificate, dated the Closing Date, executed by the Secretary of the Company and each Guarantor, certifying such matters as the Initial Purchaser may reasonably request;

(iv) a certificate of solvency, dated the Closing Date, executed by the principal financial or accounting officer of the Company substantially in the form previously approved by the Initial Purchaser or its counsel;

(v) the opinion of Weil, Gotshal & Manges LLP, counsel to the Company, dated the Closing Date, in the form of Exhibit A attached hereto; and

(vi) an opinion, dated the Closing Date, of Proskauer Rose LLP, counsel to the Initial Purchaser, in form satisfactory to the Initial Purchaser covering such matters as are customarily covered in such opinions.

(h) The Initial Purchaser shall have received from Ernst & Young LLP, independent auditors, with respect to the Company, (A) a customary comfort letter, dated the date of the Final Offering Circular, in form and substance reasonably satisfactory to the Initial Purchaser and its counsel, with respect to the financial statements and certain financial information contained in the Final Offering Circular (other than all Kilian Financial Statements and information), and (B) a customary comfort letter, dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchaser and its counsel, to the effect that Ernst & Young LLP reaffirms the statements made in its letter furnished pursuant to clause (A).

(i) Each of the Documents shall have been executed and delivered by all parties thereto, and the Initial Purchaser shall have received a fully executed original of each Document.

(j) The Initial Purchaser shall have received copies of all opinions, certificates, letters and other documents delivered under or in connection with the Offering or any transaction contemplated in the Documents.

(k) The terms of each Document shall conform in all material respects to the description thereof in the Final Offering Circular.

(l) The Collateral Agent shall have received (with a copy for the Initial Purchaser) on the Closing Date:

(i) appropriately completed Uniform Commercial Code financing statements naming the Company and each Guarantor as a debtor and the Collateral Agent as the secured party, or other similar instruments or documents to be filed under the UCC of all jurisdictions as may be necessary or, in the reasonable opinion of the Collateral Agent and its counsel, desirable to perfect the security interests of the Collateral Agent pursuant to the Security Agreement;

(ii) appropriately completed Uniform Commercial Code Form UCC-3 termination statements, if any, necessary to release all Liens (other than Permitted Liens) of any Person in any collateral described in any Security Agreement previously granted by any Person;

(iii) certified copies of Uniform Commercial Code Requests for Information or Copies (Form UCC-11), or a similar search report certified by a party acceptable to the Collateral Agent, dated a date reasonably near to the Closing Date, listing all effective financing statements which name the Company or any Guarantor (under its present name and any previous names) as the debtor, together with copies of such financing statements (none of which shall cover any collateral described in any Collateral Agreement, other than such financing statements that evidence Permitted Liens);

(iv) such other approvals, opinions or documents as the Collateral Agent may reasonably request in form and substance reasonably satisfactory to the Collateral Agent; and

(v) the Collateral Agent and its counsel shall be satisfied that (i) the Lien granted to the Collateral Agent, for the benefit of the Secured Parties in the collateral described above is of the priority described in the Final Offering Circular; and (ii) no Lien exists on any of the collateral described above other than the Lien created in favor of the Collateral Agent, for the benefit of the Secured Parties, pursuant to a Collateral Agreement, in each case subject to the Permitted Liens.

(m) Provision shall have been made for the filing of all Uniform Commercial Code financing statements or other similar financing statements and Uniform Commercial Code Form UCC-3 termination statements required pursuant to clause (l)(i) and (ii) above (collectively, the “Filing Statements”) reasonably acceptable to the Collateral Agent (the “Filing Agent”).

(n) The Initial Purchaser shall have received substantially contemporaneously with the Closing a copy of the receipt of a payoff letter or other evidence of repayment from each of the institutions listed on Schedule II attached hereto.

(o) The Initial Purchaser shall have received evidence that the Equity Contribution and Other Investments to Parent in the amount of $49,100,000 shall have been consummated as described under the section entitled “The Acquisition and Related Transaction” of the Offering Circular.

(p) The Acquisition shall have occurred or shall occur substantially simultaneously with the Closing of the Offering.

(q) Each of the Subsidiaries shall have executed counterparts of this Agreement in the form attached as Exhibit B hereto and delivered copies of such executed counterparts to the Initial Purchaser.

8. Indemnification and Contribution.

(a) The Company and the Guarantors jointly and severally agree to indemnify and hold harmless the Initial Purchaser, and each person, if any, who controls the Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, against any losses, claims, damages or liabilities of any kind to which the Initial Purchaser or such controlling person may become subject under the Act, the Exchange Act or otherwise, insofar as any such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon:

(i) any untrue statement or alleged untrue statement of any material fact contained in any Offering Circular or any amendment or supplement thereto;

(ii) the omission or alleged omission to state, in any Offering Circular or any amendment or supplement thereto, a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; or

(iii) any breach by the Company or any of the Subsidiaries of their respective representations, warranties and agreements set forth herein;

and, subject to the provisions hereof, will reimburse, as incurred, the Initial Purchaser and each such controlling person for any legal or other expenses reasonably incurred by the Initial Purchaser or such controlling person in connection with investigating, defending against or appearing as a third-party witness in connection with any such loss, claim, damage, liability or action in respect thereof; provided, however, the Company and the Guarantors will not be liable in any such case to the extent (but only to the extent) that any such loss, claim, damage or liability is finally judicially determined by a court of competent jurisdiction in a final, unappealable judgment, to have resulted solely from any untrue statement or alleged untrue statement or omission or alleged omission made in any Offering Circular or any amendment or supplement thereto in reliance upon and in conformity with written information concerning the Initial Purchaser furnished to the Company by the Initial Purchaser specifically for use therein. This indemnity agreement will be in addition to any liability that the Company and the Subsidiaries may otherwise have to the indemnified parties. The Company and the Guarantors shall not be liable under this Section 8 for any settlement of any claim or action effected without their prior written consent, which shall not be unreasonably withheld; and provided further, however, that this indemnity, as to the Preliminary Offering Circular, shall not inure to the benefit of the Initial Purchaser (or any person controlling such Initial Purchaser) on account of any loss, claim, damage or liability arising from the sale of Notes to any person by such Initial Purchaser if such Initial Purchaser failed to send or give a copy of the Final Offering Circular (as the same may be supplemented or amended) to such person at or prior to the written confirmation of the sale of the Notes to such person, and the untrue statement or alleged untrue statement or omission or alleged omission of a material fact in such Preliminary Offering Circular was corrected in the Final Offering Circular, unless such failure resulted from noncompliance by the Company with Section 5(b).

(b) The Initial Purchaser agrees to indemnify and hold harmless each of the Company and the Guarantors and their respective directors, officers and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act against any losses, claims, damages or liabilities to which the Company or any such director, officer or controlling person may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) are finally judicially

determined by a court of competent jurisdiction in a final, unappealable judgment, to have resulted solely from (i) any untrue statement or alleged untrue statement of any material fact contained in any Offering Circular or any amendment or supplement thereto or (ii) the omission or the alleged omission to state therein a material fact required to be stated in any Offering Circular or any amendment or supplement thereto or necessary to make the statements therein not misleading, in each case to the extent (but only to the extent) that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information concerning such Initial Purchaser, furnished to the Company or its agents by the Initial Purchaser specifically for use therein; and, subject to the limitation set forth immediately preceding this clause, will reimburse, as incurred, any legal or other expenses incurred by the Company, each of the Subsidiaries or any such director, officer or controlling person in connection with any such loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability that the Initial Purchaser may otherwise have to the indemnified parties.

(c) As promptly as reasonably practicable after receipt by an indemnified party under this Section 8 of notice of the commencement of any action for which such indemnified party is entitled to indemnification under this Section 8, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party of the commencement thereof in writing; but the omission to so notify the indemnifying party (i) will not relieve such indemnifying party from any liability under paragraph (a) or (b) above unless and only to the extent it is materially prejudiced as a result thereof and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraphs (a) and (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may determine, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided, however, that if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest, (ii) the defendants in any such action include both the indemnified party and the indemnifying party, and the indemnified party shall have been advised by counsel in writing that there may be one or more legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying party, or (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after receipt by the indemnifying party of notice of the institution of such action, then, in each such case, the indemnifying party shall not have the right to direct the defense of such action on behalf of such indemnified party or parties and such indemnified party or parties shall have the right to select separate counsel to defend such action on behalf of such indemnified party or parties at the expense of the indemnifying party. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and approval by such indemnified party of counsel appointed to defend such action, the indemnifying party will not be liable to such indemnified party under this Section 8 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof, unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the immediately preceding sentence (it being understood, however, that in connection with such action the indemnifying party shall not be liable for the expenses of more than one separate counsel (in addition to local counsel) in any one action or separate but substantially similar actions in the same jurisdiction arising out of the same general allegations or circumstances, designated by the Initial Purchaser in the case of paragraph (a) of this Section 8 or the Company in the case of paragraph (b) of this Section 8, representing

the indemnified parties under such paragraph (a) or paragraph (b), as the case may be, who are parties to such action or actions) or (ii) the indemnifying party has authorized in writing the employment of counsel for the indemnified party at the expense of the indemnifying party. After such notice from the indemnifying party to such indemnified party, the indemnifying party will not be liable for the costs and expenses of any settlement of such action effected by such indemnified party without the prior written consent of the indemnifying party (which consent shall not be unreasonably withheld), unless such indemnified party waived in writing its rights under this Section 8, in which case the indemnified party may effect such a settlement without such consent.

(d) No indemnifying party shall be liable under this Section 8 for any settlement of any claim or action (or threatened claim or action) effected without its written consent, which shall not be unreasonably withheld, but if a claim or action is settled with its written consent, or if there is a final judgment for the plaintiff with respect to any such claim or action, each indemnifying party jointly and severally agrees, subject to the exceptions and limitations set forth above, to indemnify and hold harmless each indemnified party from and against any and all losses, claims, damages or liabilities (and legal and other expenses as set forth above) incurred by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld), effect any settlement or compromise of any pending or threatened proceeding in respect of which the indemnified party is or could have been a party, or indemnity could have been sought hereunder by the indemnified party, unless such settlement (A) includes an unconditional written release of the indemnified party, in form and substance satisfactory to the indemnified party, from all liability on claims that are the subject matter of such proceeding and (B) does not include any statement as to an admission of fault, culpability or failure to act by or on behalf of the indemnified party.

(e) In circumstances in which the indemnity agreement provided for in the preceding paragraphs of this Section 8 is unavailable to, or insufficient to hold harmless, an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof), each indemnifying party, in order to provide for just and equitable contributions, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect (i) the relative benefits received by the indemnifying party or parties, on the one hand, and the indemnified party, on the other hand, from the Offering or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, not only such relative benefits but also the relative fault of the indemnifying party or parties, on the one hand, and the indemnified party, on the other hand, in connection with the statements or omissions or alleged statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof). The relative benefits received by the Company, on the one hand, and the Initial Purchaser, on the other hand, shall be deemed to be in the same proportion as the total proceeds from the Offering (before deducting expenses) received by the Company bear to the total discounts and commissions received by the Initial Purchaser. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or the Initial Purchaser, on the other hand, the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission or alleged statement or omissions, and any other equitable considerations appropriate in the circumstances.

(f) The Company, the Subsidiaries and the Initial Purchaser agree that it would not be equitable if the amount of such contribution determined pursuant to the immediately preceding paragraph (e) were determined by pro rata or per capita allocation or by any other method of allocation that

does not take into account the equitable considerations referred to in the first sentence of the immediately preceding paragraph (e). Notwithstanding any other provision of this Section 8, the Initial Purchaser shall not be obligated to make contributions hereunder that in the aggregate exceed the total discounts, commissions and other compensation received by such Initial Purchaser under this Agreement, less the aggregate amount of any damages that such Initial Purchaser has otherwise been required to pay by reason of the untrue or alleged untrue statements or the omissions or alleged omissions to state a material fact. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of the immediately preceding paragraph (e), each person, if any, who controls the Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Initial Purchaser, and each director of the Company and the Subsidiaries, each officer of the Company and the Subsidiaries and each person, if any, who controls either of the Company or the Subsidiaries within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, shall have the same rights to contribution as the Company and the Subsidiaries.

9. Termination. The Initial Purchaser may terminate this Agreement at any time prior to the Closing Date by written notice to the Company if any of the following has occurred:

(a) since the date hereof, any Material Adverse Effect or development involving or reasonably expected to result in a prospective Material Adverse Effect that could, in the Initial Purchaser’s sole judgment, be expected to (i) make it impracticable or inadvisable to proceed with the offering or delivery of the Notes on the terms and in the manner contemplated in the Final Offering Circular, or (ii) materially impair the investment quality of any of the Notes;

(b) the failure of the Company or the Subsidaries to satisfy the conditions contained in Section 7(a) hereof on or prior to the Closing Date;

(c) any outbreak or escalation of hostilities or other national or international calamity or crisis, including acts of terrorism, or material adverse change or disruption in economic conditions in, or in the financial markets of, the United States (it being understood that any such change or disruption shall be relative to such conditions and markets as in effect on the date hereof), if the effect of such outbreak, escalation, calamity, crisis, act or material adverse change in the economic conditions in, or in the financial markets of, the United States could be reasonably expected to make it, in the Initial Purchaser’s sole judgment, impracticable or inadvisable to market or proceed with the offering or delivery of the Notes on the terms and in the manner contemplated in the Final Offering Circular or to enforce contracts for the sale of any of the Notes;

(d) the enactment, publication, decree or other promulgation after the date hereof of any Applicable Law that in the Initial Purchaser’s counsel’s sole opinion materially and adversely affects, or could be reasonably expected to materially and adversely affect, the properties, business, prospects, operations, earnings, assets, liabilities or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole;

(e) any securities of the Company shall have been downgraded or placed on any “watch list” for possible downgrading by any “nationally recognized statistical rating organization,” as such term is defined for purposes of Rule 436(g)(2) under the Act; or

(f) the declaration of a banking moratorium by any Governmental Authority; or the taking of any action by any Governmental Authority after the date hereof in respect of its monetary or fiscal affairs that in the Initial Purchaser’s opinion is reasonably likely to have a material adverse effect on the financial markets in the United States or elsewhere.

10. Survival of Representations and Indemnities. The representations and warranties, covenants, indemnities and contribution and expense reimbursement provisions and other agreements, representations and warranties of the Company and the Guarantors set forth in or made pursuant to this Agreement shall remain operative and in full force and effect, and will survive, regardless of (i) any investigation, or statement as to the results thereof, made by or on behalf of the Initial Purchaser, (ii) acceptance of the Notes, and payment for them hereunder, and (iii) any termination of this Agreement.

11. Default by the Initial Purchaser. If the Initial Purchaser shall breach its obligations to purchase the Notes that it has agreed to purchase hereunder on the Closing Date and arrangements satisfactory to the Company for the purchase of such Notes are not made within 36 hours after such default, this Agreement shall terminate with respect to the Initial Purchaser without liability on the part of the Company. Nothing herein shall relieve the Initial Purchaser from liability for its default.

12. Information Supplied by the Initial Purchaser. The statements set forth on the cover page of the Offering Circular with respect to price and in the first sentence of the third paragraph and the first and second sentences of the last paragraph under the heading “Plan of Distribution” in the Offering Circular (to the extent such statements relate to the Initial Purchaser) constitute the only information furnished by the Initial Purchaser to the Company or the Subsidiaries for the purposes of Sections 4(a) and 8 hereof.

13. Miscellaneous.

(a) Notices given pursuant to any provision of this Agreement shall be addressed as follows: (i) if to the Company, to: 14 Hayward St., Quincy, Massachusetts 02171, Attention: Michael L. Hurt, with a copy to: Weil, Gotshal & Manges LLP, 201 Redwood Shores Parkway, Redwood Shores, California 94065, Attention: Curtis L. Mo, Esq., and (ii) if to the Initial Purchaser, to: Jefferies & Company, Inc., 11100 Santa Monica Boulevard, 10th Floor, Los Angeles, California 90025, Attention: Lloyd H. Feller, Esq., with a copy to: Proskauer Rose LLP, 1585 Broadway, New York, New York 10036, Attention: Julie M. Allen, Esq. (or in any case to such other address as the person to be notified may have requested in writing).

(b) This Agreement has been and is made solely for the benefit of and shall be binding upon the Company and the Subsidiaries, the Initial Purchaser and, to the extent provided in Section 8 hereof, the controlling persons, officers, directors, partners, employees, representatives and agents referred to in Section 8, and their respective heirs, executors, administrators, successors and assigns, all as and to the extent provided in this Agreement, and no other person shall acquire or have any right under or by virtue of this Agreement. The term “successors and assigns” shall not include a purchaser of any of the Notes from the Initial Purchaser merely because of such purchase. Notwithstanding the foregoing, it is expressly understood and agreed that each purchaser who purchases Notes from the Initial Purchaser is intended to be a beneficiary of the covenants of the Company and the Guarantors contained in the Registration Rights Agreement to the same extent as if the Notes were sold and those covenants were made directly to such purchaser by the Company and the Guarantors, and each such purchaser shall have the right to take action against the Company and the Guarantors to enforce, and obtain damages for any breach of, those covenants.

(c) THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

(d) EACH OF THE COMPANY AND THE GUARANTORS HEREBY EXPRESSLY AND IRREVOCABLY (I) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY; AND (II) WAIVES (A) ITS RIGHT TO A TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE INITIAL PURCHASER AND FOR ANY COUNTERCLAIM RELATED TO ANY OF THE FOREGOING AND (B) ANY OBLIGATION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(e) This Agreement may be signed in various counterparts, which together shall constitute one and the same instrument.

(f) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(g) If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(h) This Agreement may be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may be given, provided that the same are in writing and signed by all of the signatories hereto.

Please confirm that the foregoing correctly sets forth the agreement among the Company, the Guarantors and the Initial Purchaser.

Very truly yours,

ALTRA INDUSTRIAL MOTION, INC.


By:
	Name:	Michael L. Hurt
	Title:	Chief Executive Officer


THE KILIAN COMPANY


By:
	Name:
	Title:


KILIAN MANUFACTURING CORPORATION


By:
	Name:
	Title:

Accepted and Agreed to:


JEFFERIES & COMPANY, INC.


By:
	Name:	M. Brent Stevens
	Title:	Executive Vice President

SCHEDULE I

LIST OF SUBSIDIARIES

Subsidiaries		Jurisdiction of Incorporation/Formation

American Enterprise MPT Corp.		Delaware
American Enterprises MPT Holdings, L.P.		Delaware
Ameridrives International, L.P.		Delaware
Boston Gear LLC		Delaware
Formsprag LLC		Delaware
Kilian Canada, ULC*		Nova Scotia, Canada
The Kilian Company		Delaware
Kilian Manufacturing Corporation		Delaware
Nuttall Gear LLC		Delaware
Stieber GmbH*		Germany
3091780 Nova Scotia Company*		Nova Scotia, Canada
Warner Electric Australia Pty. Ltd.*		Australia
Warner Electric Europe SAS*		France
Warner Electric Group GmbH*		Germany
Warner Electric (Holding) SAS*		France
Warner Electric International Holding, Inc.		Delaware
Warner Electric LLC		Delaware
Warner Electric (Neth) Holding B.V.*		Netherlands
Warner Electric (Singapore) Ltd.*		Singapore
Warner Electric (Taiwan) Ltd.*		Taiwan
Warner Electric Technology LLC		Delaware
Warner Electric (Thailand) Ltd.*		Thailand
Warner Electric UK Group Ltd.*		United Kingdom
Warner Electric UK Holding Ltd.*		United Kingdom
Warner Electric Verwaltungs GmbH*		Germany
Warner Shui Hing Limited*		Hong Kong
Wichita Company Ltd.*		United Kingdom

* Denotes a Foreign Restricted Subsidiary of the Company

SCHEDULE II

Indebtedness		Amount Outstanding

Credit Agreement, dated as of October 22, 2004, among Kilian Manufacturing Corporation, The Kilian Company and ABN AMRO CCC Private Equity Investments, Inc.		(1) Principal term loan amount of $4,000,000 (2) PIK amount of $13,000 (3) Accrued interest of $57,293 (4) Prepayment fee of $80,000 Total: $4,150,293

Credit Agreement, dated as of October 22, 2004, among Kilian Manufacturing Corporation, The Kilian Company and LaSalle Bank National Association.		(1) Principal senior term loan amount of $4,200,000 (2) Accrued interest of $24,571 Total: $4,224,571 (1) Principal revolver amount of $3,000,000 (2) Accrued interest of $17,713 Total: $3,017,713

Credit Agreement, dated as of October 22, 2004, among Kilian Canada ULC, 3091780 Nova Scotia Company and ABN AMRO Bank N.V., Canada Branch.		(1) Principal senior term loan amount of $800,000 (2) Accrued interest of $4,950 Total: $804,950 (1) Principal revolver amount of $1,000,000 (2) Accrued interest of $5,904 Total: $1,005,904

Total Amount of Indebtedness:		$ 13,203,431

EXHIBIT A

FORM OF OPINIONS OF
WEIL, GOTSHAL & MANGES LLP

Set forth below are the proposed opinions to be included in the proposed form of opinion of Weil, Gotshal & Manges LLP, which shall be limited to New York law and Delaware General Corporation Law. This Exhibit A will be replaced with the actual form of opinion and it is our intent to negotiate the form of such opinion in its entirety (including the assumptions, qualifications and limitations to be contained therein).

(i) Each of the Subject Persons is a corporation or limited liability company, as applicable, validly existing and in good standing under the laws of the State of Delaware.

(ii) Each of the Subject Persons has the requisite corporate or limited liability company, as applicable, power and authority to carry on its businesses and to own, lease and operate its properties described in the Final Offering Circular and to execute, deliver and perform its obligations under the Subject Documents.

(iii) Each of the Subject Persons is duly qualified to transact business and is in good standing as a foreign corporation or a limited liability company, as the case may be, authorized to do business in each jurisdiction listed on the attached Annex in which the nature of such businesses or the ownership or leasing of such properties requires such qualification, except where the failure to be so qualified could not, singly or in the aggregate, reasonably be excepted to have a Material Adverse Effect.

(iv) The authorized capital stock of the Company consists of 50,000,000 shares of Common Stock, par value $0.001 per share, and 40,000,000 shares of Preferred Stock, par value $0.001 per share. Upon the Closing, there will be 878,114 shares of Common Stock and [ ] shares of Preferred Stock issued or outstanding. All of such outstanding shares of Common Stock and all of the outstanding capital stock or limited liability company interests, as applicable, of each Subject Person have been duly authorized and validly issued, are fully paid and non-assessable and were not issued in violation of any preemptive rights pursuant to law or the entity’s certificate of incorporation or operating agreement, as applicable; to our knowledge, all of the outstanding shares of capital stock of the Subject Persons other than the Company is owned, directly or indirectly, by the Company and free and clear of all security interests, liens, encumbrances, equities and claims or restrictions on transferability (other than those imposed by the Act and the securities or “Blue Sky” laws of certain domestic or foreign jurisdictions) or voting (other than Permitted Liens).

(v) The Notes are in the form contemplated by the Indenture. The execution, delivery and performance of the Notes by the Company have been duly authorized by the Company. The Notes have been duly executed and delivered by or on behalf of the Company, and are valid and legally binding obligations of the Company, entitled to the benefit of the Indenture, the Collateral Agreements and the Registration Rights Agreement, and enforceable against the Company in accordance with their terms subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that (A) rights to indemnification and contribution thereunder may be limited by federal or state securities laws or

public policy relating thereto, (B) certain remedial provisions of the Collateral Agreements are or may be unenforceable in whole or in part under the laws of the State of New York, but the inclusion of such provisions does not affect the validity of the Collateral Agreements, and the Collateral Agreements contain adequate provisions for the practical realization of the rights and benefits afforded thereby, (C) no opinion is expressed with respect to any provision of the Collateral Agreements providing for liquidated damages, (D) no opinion is expressed in this paragraph (v) as to the attachment, perfection or priority of any liens granted pursuant to the Pledge or Security Agreement and (E) no opinion is expressed with respect to rights of setoff under the Indenture.

(vi) The execution, delivery and performance of the Exchange Notes and the Private Exchange Notes have been duly and validly authorized by the Company. The Exchange Notes and the Private Exchange Notes, when duly executed and delivered by or on behalf of the Company, will be valid and legally binding obligations of the Company, entitled to the benefit of the Indenture, the Collateral Agreements and the Registration Rights Agreement, and enforceable against the Company in accordance with their terms subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that (A) rights to indemnification and contribution thereunder may be limited by federal or state securities laws or public policy relating thereto, (B) certain remedial provisions of the Collateral Agreements are or may be unenforceable in whole or in part under the laws of the State of New York, but the inclusion of such provisions does not affect the validity of the Collateral Agreements, and the Collateral Agreements contain adequate provisions for the practical realization of the rights and benefits afforded thereby, (C) no opinion is expressed with respect to any provision of the Collateral Agreements providing for liquidated damages, (D) no opinion is expressed in this paragraph (vi) as to the attachment, perfection or priority of any liens granted pursuant to the Pledge or Security Agreement and (E) no opinion is expressed with respect to rights of setoff under the Indenture.

(vii) The execution, delivery and performance by the Guarantors of the guarantees of the Exchange Notes and the Private Exchange Notes have been duly and validly authorized by the each of the Guarantors, and, when executed and delivered by each Guarantor in accordance with the terms of the Registration Rights Agreement and the Indenture (assuming the due authorization, execution and delivery of the Registration Rights Agreement and the Indenture by the Trustee and due authentication and delivery of such guarantees by the Trustee in accordance with the Indenture), will be legal, valid and binding obligations of the Guarantors, entitled to the benefit of the Indenture, the Collateral Agreements and the Registration Rights Agreement, and enforceable against each of the Guarantors in accordance with their terms subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that (A) rights to indemnification and contribution thereunder may be limited by federal or state securities laws or public policy relating thereto, (B) certain remedial provisions of the Collateral Agreements are or may be unenforceable in whole or in part under the laws of the State of New York, but the inclusion of such provisions does not affect the validity of the Collateral Agreements, and the Collateral Agreements contain adequate provisions for the practical realization of the rights and benefits afforded thereby, (C) no opinion is expressed with respect to any provision of the Collateral Agreements providing for liquidated damages, (D) no opinion is expressed in this paragraph (vii) as to the attachment, perfection or priority of any liens granted pursuant to the Pledge or Security Agreement and (E) no opinion is expressed with respect to rights of setoff under the Indenture.

(viii) Each of the Subject Persons has the requisite corporate or limited liability company power and authority to execute, deliver and perform its obligations under the Registration Rights Agreement. The execution, delivery and performance of the Registration Rights Agreement has been duly authorized by each of the Subject Persons. The Registration Rights Agreement, when executed and delivered by each Subject Person, will constitute a legal, valid and binding obligation of such Subject Person, enforceable against such Subject Person in accordance with its terms subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that rights to indemnification and contribution thereunder may be limited by federal or state securities laws or public policy relating thereto.

(ix) Each of the Subject Persons has the requisite corporate or limited liability company power and authority to execute, deliver and perform its obligations under the Purchase Agreement. The execution, delivery and performance of the Purchase Agreement and the consummation of the transactions contemplated thereby by each Subject Person have been duly authorized by each such Subject Person. The Purchase Agreement has been duly executed and delivered by each Subject Person.

(x) The Indenture is in sufficient form for qualification under the TIA. Each of the Indenture (including the Guarantees provided in the Indenture) and the Collateral Agreements has been duly authorized by each Subject Person that is a party thereto. Each of the Indenture (including the Guarantees provided in the Indenture) and the Collateral Agreements, is a legal, valid and binding obligation of such Subject Person, enforceable against such Subject Person in accordance with its terms subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that (A) rights to indemnification and contribution thereunder may be limited by federal or state securities laws or public policy relating thereto, (B) certain remedial provisions of the Collateral Agreements are or may be unenforceable in whole or in part under the laws of the State of New York, but the inclusion of such provisions does not affect the validity of the Collateral Agreements, and the Collateral Agreements contain adequate provisions for the practical realization of the rights and benefits afforded thereby, (C) no opinion is expressed with respect to any provision of the Collateral Agreements providing for liquidated damages, (D) no opinion is expressed in this paragraph (x) as to the attachment, perfection or priority of any liens granted pursuant to the Pledge or Security Agreement and (E) no opinion is expressed with respect to rights of setoff under the Indenture.

(xi) When executed and delivered, the Subject Documents will conform in all material respects to the descriptions thereof in the Final Offering Circular.

(xii) To our knowledge, except as disclosed in the Final Offering Circular, there are no Proceedings pending or threatened that either seek to restrain, enjoin, prevent the consummation of, or otherwise challenge any of the Subject Documents or any of the transactions contemplated therein. To our knowledge, no Subject Person is subject to any judgment, order, decree, rule or regulation of any Governmental Authority that restrains, enjoins, prevents the consummation of, or otherwise challenges the transactions contemplated by the Subject Persons.

(xiii) No Subject Person is in violation of its Charter Documents. To our knowledge, no Subject Person is (i) in violation of any Applicable Law of any Governmental Authority, or (ii) to our knowledge, in breach of or default under any Applicable Agreements listed on Schedule 1 hereto, in each

case other than as disclosed in the Final Offering Circular or breaches or defaults that could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. To our knowledge, there exists no condition that, with the passage of time or otherwise, would constitute (a) a violation of such Charter Documents of any such Subject Person or Applicable Laws or (b) to our knowledge, a breach of or default under any Applicable Agreement or (c) result in the imposition of any penalty or the acceleration of any indebtedness, other than breaches, penalties or defaults that could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. All Applicable Agreements are in full force and effect and are legal, valid and binding obligations, and no default has occurred or is continuing thereunder, other than such defaults that could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(xiv) No consent, approval, authorization or order of any Governmental Authority or third party is required for the issuance and sale by the Company of the Notes to the Initial Purchaser, the execution, delivery or performance by any Subject Person of any Subject Document to which it is a party, except (i) such as have been obtained, (ii) such as may be required under state securities or “Blue Sky” laws in connection with the purchase and resale of the Notes by the Initial Purchaser, (iii) immaterial consents, approvals, waivers, licenses and authorizations and (iv) filings in connection with perfecting security interests.

(xv) Assuming (i) the representations of the Initial Purchaser and the Company contained in the Purchase Agreement are true, correct and complete, (ii) compliance by the Initial Purchaser and the Company with their respective covenants set forth in the Purchase Agreement and (iii) that purchasers to whom the Initial Purchaser initially resells the Notes receive a copy of the Offering Circular prior to such sale or a preliminary offering circular containing a section captioned “Notice to Investors” that is substantially similar to the section captioned “Notice to Investors” in the Offering Circular, it is not necessary in connection with the offer, sale and delivery of the Notes to the Initial Purchaser pursuant to the Purchase Agreement or the offer and resales of the Notes by the Initial Purchaser, in the manner contemplated by the Purchase Agreement and described in the Offering Circular, to register the Notes under the Securities Act of 1933, as amended, or to qualify the Indenture under the Trust Indenture Act of 1939, as amended.

(xvi) The issuance and sale by the Company of the Notes as contemplated by the Purchase Agreement does not violate Regulation T, U or X of the Board of Governors of the Federal Reserve System.

(xvii) The execution, delivery or performance by any Subject Person of the Subject Documents to which it is a party will not conflict with, violate, constitute a breach of or a default (with the passage of time or otherwise) under, require the consent of any person (other than consents already obtained) under, result in the imposition of a Lien on any assets of any Subject Person (except pursuant to the Subject Documents or the Credit Agreement), or result in an acceleration of indebtedness under or pursuant to (i) the Charter Documents of any Subject Person, (ii) to our knowledge, any Applicable Agreement listed on Schedule 1 hereto, other than such breaches, violations or defaults that would not, singly or in the aggregate, have a Material Adverse Effect, or (iii) any Applicable Law.

(xviii) The Company is not, and after giving effect to the offering and sale of the Notes and the application of the proceeds thereof as described in the Final Offering Circular will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

(xix) (A) The execution and delivery of the Security Agreement creates a valid security interest in the Collateral (as defined in the Security Agreement), as security for the Secured Obligations (as defined in the Security Agreement). Assuming the filing of the financing statements on Form UCC-1 attached hereto as Exhibit A with the Secretary of State of the State of Delaware, such security interest is perfected, to the extent a security interest in the Collateral may be perfected by the filing of a financing statement under the Uniform Commercial Code in effect in the State of Delaware (the “DE UCC”).

(B) The execution and delivery of the Security Agreement creates a valid lien on and security interest in the pledged securities described on the schedule attached hereto (“Pledged Securities”), as security for the Secured Obligations (as defined in the Security Agreement). Assuming (i) delivery in the State of New York to Wells Fargo Foothill, Inc. as representative (as defined in the Uniform Commercial Code in effect in the State of New York (the “NY UCC” and, together with the DE UCC, the “UCC”)) for the Secured Parties and the Lenders (in such capacity, the “Control Collateral Sub-Agent”) of all certificates that represent the Pledged Securities, together with stock powers properly executed in blank with respect thereto, and (ii) that the Control Collateral Sub-Agent was without notice of any adverse claim (as such phrase is defined in Section 8-105 of the NY UCC with respect to the Pledged Securities, such security interest is perfected and is free of any adverse claim.

The opinions in subparagraph (A) and, with respect to subclause (a) below, subparagraph (B) are subject to the following exceptions:

(a) that with respect to rights in or title to the Collateral of any Subject Party, we express no opinion, and have assumed that such Subject Party has rights in or title to the Collateral;

(b) that with respect to any Collateral as to which the perfection of a lien or security interest is governed by the laws of any jurisdiction other than the State of Delaware, we express no opinion;

(c) that with respect to any Collateral which is or may become fixtures (as defined in Section 9-102(a)(41) of the UCC) or a commercial tort claim (as defined in Section 9-102(a)(13) of the UCC), we express no opinion.

The opinion set forth in subparagraph (B) is also subject to the following exceptions:

(d) that with respect to (i) federal tax liens accorded priority under law and (ii) liens created under Title IV of the Employee Retirement Income Security Act of 1974 which are properly filed after the date hereof, we express no opinion as to the relative priority of such liens and the security interests created by the Pledge Agreement or as to whether such liens may be adverse claims; and

(e) that with respect to any claim (including for taxes) in favor of any state or any of its respective agencies, authorities, municipalities or political subdivisions which claim is given lien status and/or priority under any law of such state, we express no opinion as to the relative priority of such

liens and the security interests created by the Pledge Agreement or as to whether such liens may be adverse claims.

In addition, the opinions in subparagraphs (A) and (B) are subject to (i) the limitations on perfection of security interests in proceeds resulting from the operation of Section 9-315 of the UCC; (ii) the limitations with respect to buyers in the ordinary course of business imposed by Sections 9-318 and 9-320 of the UCC; (iii) the limitations with respect to documents, instruments and securities imposed by Sections 8-302, 9-312 and 9-331 of the UCC; (iv) the provisions of Section 9-203 of the UCC relating to the time of attachment; and (v) Section 552 of Title 11 of the United States Code (the “Bankruptcy Code”) with respect to any Collateral acquired by any Subject Party subsequent to the commencement of a case against or by any Subject Party under the Bankruptcy Code.

We further assume that all filings will be timely made and duly filed as necessary (i) in the event of a change in the name, identity or corporate structure of any Subject Party, (ii) in the event of a change in the location of any Subject Party and (iii) to continue to maintain the effectiveness of the original filings.

(xx) Those statements in the Final Offering Circular under the captions “Offering Circular Summary,” “Risk Factors,” “The Acquisition and Related Transactions,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” “Management,” “Certain Relationships and Related Transactions” and “Description of Certain Indebtedness,” in each case insofar as such statements constitute summaries of the legal matters or legal conclusions referred to therein, are accurate in all material respects and present fairly the information required to be shown.

We have reviewed the Final Offering Circular and we have participated in conferences with representatives of the Company, its independent public accountants, the Initial Purchaser and its counsel, at which conferences the contents of the Final Offering Circular and related matters were discussed. Subject to the foregoing, we confirm to you that, on the basis of the information we gained in the course of performing the services referred to above, no facts have come to our attention which cause us to believe that the Final Offering Circular, on the date thereof, contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements contained therein not misleading or that the Final Offering Circular, as of its date or as of the date hereof, contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

Definitions: These would be worked into the preamble of the Opinion.

Generally: Capitalized terms used herein but not defined shall have the meanings given to them in the Purchase Agreement.

Collateral Agreements: The Security Agreement and the Intercreditor Agreement.

Deposit Account Agreement: Use Definition from Senior Credit Facility

NY Subject Documents: The Subject Documents governed by New York law.

Subject Documents: All of the Documents.

Subject Persons: The Company and the Guarantors incorporated or formed in Delaware, New York or an other jurisdiction in which company counsel has offices.

EXHIBIT B

Counterpart to the Purchase Agreement

November 30, 2004

The undersigned hereby agrees to be bound by the terms of the Purchase Agreement dated November 22, 2004, among Altra Industrial Motion, Inc., a Delaware corporation , each of the Guarantors (as defined therein) and the Initial Purchaser (as defined therein). For the avoidance of doubt, such obligors shall include, but not be limited to, the obligations enumerated in Section 8(a) of the Purchase Agreement. The undersigned hereby also agrees that all references to “Subsidiaries” in the Purchase Agreement shall include the undersigned and the undersigned shall be bound by all provisions of the Purchase Agreement containing such references.

	AMERICAN ENTERPRISE MPT CORP.


	By:
			Name:
			Title:


	AMERICAN ENTERPRISES MPT HOLDINGS, L.P.


	By:
			Name:
			Title:


	AMERIDRIVES INTERNATIONAL, L.P.


	By:
			Name:
			Title:

	BOSTON GEAR LLC


	By:
			Name:
			Title:


	FORMSPRAG LLC


	By:
			Name:
			Title:


	NUTTALL GEAR LLC


	By:
			Name:
			Title:


	WARNER ELECTRIC INTERNATIONAL HOLDING, INC.


	By:
			Name:
			Title:


	WARNER ELECTRIC LLC


	By:
			Name:
			Title:

	WARNER ELECTRIC TECHNOLOGY LLC


	By:
			Name:
			Title:

EX-2.1 3 a2155511zex-2_1.htm EXHIBIT 2.1

Exhibit 2.1

Execution Copy

LLC PURCHASE AGREEMENT

among

WARNER ELECTRIC HOLDING, INC.

and

COLFAX CORPORATION

and

CPT ACQUISITION CORP.

October 25, 2004

TABLE OF CONTENTS

RECITALS
ARTICLE I DEFINITIONS
ARTICLE II SALE AND PURCHASE OF LLC INTERESTS
2.01		Sale and Purchase of LLC Interests
2.02		Purchase Price
2.03		Purchase Price Adjustment
2.04		Purchase Price Allocation
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER AND COLFAX
3.01		Authorization
3.02		LLC Interests to be Transferred
3.03		Organization and Standing
3.04		Capitalization
3.05		Litigation; Compliance with Law
3.06		Financial Statements and Condition
3.07		Intellectual Property; Licenses
3.08		Property, Assets, and Leases
3.09		Conflicts
3.10		Taxes
3.11		Employee Benefit Plans
3.12		Acquired Companies’ Contracts
3.13		Environmental Matters
3.13		Environmental Matters
3.14		Bank Accounts; Accounts Receivable
3.15		No Brokers
3.16		Labor Matters
3.17		No Undisclosed Liabilities
3.18		Debt Instruments
3.19		Conduct of Business; Absence of Material Adverse Change
3.20		Insurance
3.21		Records and Books
3.22		Customers and Suppliers
3.23		Transactions with Interested Persons
3.24		Company Products
ARTICLE IV REPRESENTATIONS AND WARRANTIES BY BUYER
4.01		Organization and Standing
4.02		Authorization
4.03		Absence of Litigation; Compliance With Laws
4.04		Investment Intent
4.05		Experience
4.06		No Brokers
4.07		Financial Ability to Perform
4.08		No Reliance

ARTICLE V COVENANTS AND AGREEMENTS
5.01		Interim Operations of the Acquired Companies and the Subsidiaries
5.02		Reasonable Access; Confidentiality
5.03		Employment
5.04		Compensation and Employee Benefits
5.05		Filings; Other Action
5.06		Publicity
5.07		Records
5.08		Tax Matters
5.09		Hart-Scott-Rodino
5.10		Non-Competition; Non-Solicitation; Confidentiality
5.11		Insurance
5.12		Consents
5.13		Further Assurances
5.14		Disclosure Supplements
5.15		Cooperation with Financing
5.16		Transaction Related Taxes
5.17		Use of Colfax Name
5.18		Transition Services Agreement
ARTICLE VI CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE
6.01		Representations and Covenants
6.02		Delivery of Documents
6.03		Legal Proceedings
6.04		Consents and Approvals
6.05		Other Conditions
ARTICLE VII CONDITIONS PRECEDENT TO SELLER’S OBLIGATIONS TO CLOSE
7.01		Representations and Covenants
7.02		Delivery of Purchase Price and Documents
7.03		Legal Proceedings
7.04		Consents and Approvals
ARTICLE VIII THE CLOSING
8.01		Closing
8.02		Delivery by Seller
8.03		Delivery by Buyer
ARTICLE IX SURVIVAL; INDEMNIFICATION
9.01		Survival Periods
9.02		Indemnification by Seller and Colfax
9.03		Indemnification by Buyer
9.04		Conditions of Indemnification
9.05		Exclusive Remedy
9.06		Limitations on Seller and Colfax’s Environmental Obligations
9.07		Buyer Cooperation
ARTICLE X TERMINATION
10.01		Termination
10.02		Procedure Upon Termination
10.03		Effect of Termination

ARTICLE XI MISCELLANEOUS
11.01		Additional Actions and Documents
11.02		Expenses
11.03		Notices
11.04		Waiver
11.05		Benefit and Assignment
11.06		Entire Agreement; Amendment
11.07		Severability
11.08		Governing Law
11.09		Signature in Counterparts
11.10		Specific Performance
11.11		Arbitration
11.12		Exclusion of Danaher Corporation

iii

LLC PURCHASE AGREEMENT

THIS LLC PURCHASE AGREEMENT (this “Agreement”) is dated as of October 25, 2004, by and among Warner Electric Holding, Inc., a Delaware corporation (“Seller”), Colfax Corporation, a Delaware corporation and parent of Seller (“Colfax”) and CPT Acquisition Corp., a Delaware corporation (“Buyer”).

RECITALS

WHEREAS, Buyer desires to purchase from Seller and Seller desires to sell, assign and transfer to Buyer all of the limited liability company interests (the “LLC Interests”) of Power Transmission Holding LLC, a Delaware limited liability company (“PT”), which transfer, assignment and sale shall cause Buyer to own each of the direct subsidiaries of PT listed on Schedule 1 attached hereto (collectively with PT, the “Acquired Companies”) and the indirect subsidiaries of PT listed on Schedule 2 attached hereto (collectively, the “Subsidiaries”) all for the purchase price and subject to the terms, conditions and exclusions hereinafter set forth.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, and intending to be legally bound, the parties hereto hereby agree as follows:

See Appendix A for a list of definitions used in this Agreement.

On the basis of the representations, warranties and agreements contained herein, and subject to the terms and conditions hereof, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the LLC Interests for the purchase price specified in Section 2.02.

In full consideration for the LLC Interests and subject to adjustment pursuant to Section 2.03 below, Buyer shall pay Seller at the Closing by wire transfer of immediately available funds to the account designated in writing by Seller prior to Closing an aggregate amount of cash equal to $180 million (as adjusted pursuant to Section 2.03, the “Purchase Price”).

(a) Attached hereto is Schedule 2.03(a) which sets forth the Net Working Capital of CTPG and the adjustments agreed upon between Buyer and Seller for calculating such Net Working Capital as of September 30, 2004 (the “Peg Balance Sheet”). As promptly as practicable, but no later than sixty (60) days after the Closing Date (the “Adjustment Date”), Seller shall cause to be prepared and delivered to Buyer the closing statement to be prepared in good faith using the same methodology set forth in the Peg Balance Sheet and using consistently applied accounting policies and the same foreign exchange rates used in preparation of the Peg Balance Sheet (the “Closing Statement”) and a certificate based on such Closing Statement setting forth Seller’s calculation of the Purchase Price Adjustment Amount (as defined below) calculated in accordance with 2.03(b) below.

(b) The Purchase Price Adjustment Amount shall be the sum of (i) and (ii) below minus (iii):

(i) all cash on the balance sheet as of the Closing Date, as set forth on the Closing Statement; and

(ii) the difference between (x) the Net Working Capital set forth on the Closing Statement and (y) the Net Working Capital set forth on the Peg Balance Sheet; and

(iii) the amount of CPTG indebtedness, including all intercompany loan obligations other than those between or among the Acquired Companies and Subsidiaries, for principal, interest, fees and charges for borrowed money (excluding capital leases entered into in the Ordinary Course of Business), as of the Closing Date.

(c) If Buyer disagrees with Seller’s calculation of the Purchase Price Adjustment Amount delivered pursuant to Section 2.03(a), Buyer may, within thirty (30) days after delivery of the Closing Statement, deliver a notice to Seller disagreeing with such calculation and setting forth Buyer’s calculation of such amount, which calculation shall be prepared in good faith. Any such notice of disagreement shall specify those items or amounts as to which Buyer disagrees, and Buyer shall be deemed to have agreed with all other items and amounts contained in the Closing Statement delivered pursuant to Section 2.03(a).

(d) If a notice of disagreement shall be duly delivered pursuant to Section 2.03(c), Buyer and Seller shall, during the thirty (30) days following such delivery, use their commercially reasonable efforts to reach agreement on the disputed items or amounts in order to determine, as may be required, the amount of the Purchase Price Adjustment Amount, which amount shall not be more than the amount shown in the calculation delivered by the party to which the Purchase Price Adjustment is due nor less than the amount thereof shown in the calculation delivered by the party required to pay the Purchase Price Adjustment. If during such period, Buyer and Seller are unable to reach such agreement, they shall promptly thereafter cause PricewaterhouseCoopers (or if unable or unwilling to accept its mandate, an independent accountant to be mutually agreed upon by Buyer and Seller) (PricewaterhouseCoopers or such other independent accountant, as the case may be, the “Accounting Referee”) to review this Agreement and the disputed items or amounts for the

purpose of calculating the Purchase Price Adjustment Amount. The Accounting Referee shall deliver to Buyer and Seller, as promptly as practicable (but in any case no later than thirty (30) days from the date of engagement of the Accounting Referee), a report setting forth such calculation. Such report shall be final and binding upon Buyer and Seller. The cost of such review and report shall be borne equally by Buyer and Seller.

(e) Buyer and Seller shall, and shall cause their respective representatives to, cooperate and assist in the preparation of the Closing Statement and the calculation of the Purchase Price Adjustment Amount and in the conduct of the review referred to in this Section 2.03, including, without limitation, the making available to the extent necessary of books, records, work papers and personnel.

(f) If the Purchase Price Adjustment Amount is a positive number, the Purchase Price shall be increased by such amount and Buyer shall pay such additional amount to Seller in the manner and with interest as provided in Section 2.03(g). If the Purchase Price Adjustment Amount is a negative number, the Purchase Price shall be reduced by such amount and Seller shall remit such amount to Buyer in the manner and with interest as provided in Section 2.03(g). “Final Purchase Price Adjustment Amount” means the Purchase Price Adjustment Amount (i) as shown in Seller’s calculation delivered pursuant to Section 2.03(a) if no notice of disagreement with respect thereto is duly delivered pursuant to Section 2.03(c); or (ii) if such a notice of disagreement is delivered, (A) as agreed by Buyer and Seller pursuant to Section 2.03(d) or (B) in the absence of such agreement, as shown in the Accounting Referee’s calculation delivered pursuant to Section 2.03(d).

(g) Any payment pursuant to Section 2.03(f) shall be made at a mutually convenient time and place within three Business Days after Final Purchase Price Adjustment Amount has been determined, by wire transfer by Buyer or Seller, as the case may be, of immediately available funds to the account of such other party as may be designated in writing by such other party. The amount of any payment to be made pursuant to this Section 2.03 shall bear interest from and including the Closing Date to but excluding the date of payment at a rate per annum equal to the rate of interest published by the Wall Street Journal from time to time as the “prime rate” at the large U.S. money center banks during the period from the Closing Date to the date of payment. Such interest shall be payable at the same time as the payment to which it relates and shall be calculated daily on the basis of a year of three hundred sixty five (365) days and the actual number of days elapsed.

(a) Buyer and Seller shall use reasonable commercial efforts to agree to a preliminary allocation of the Purchase Price (the “Preliminary Allocation”) among the Acquired Companies and Subsidiaries and their related assets at or prior to Closing in accordance with Code section 1060 and the applicable Treasury Regulations. Within fifteen (15) days of determination of any adjustment pursuant to Section 2.03, Buyer shall deliver to Seller a proposed final allocation of the purchase price among the Acquired Companies and Subsidiaries and their related assets for the purposes of financial and tax reporting (the “Final Allocation”). It is agreed that the Final Allocation will be adjusted from the Preliminary Allocation only for the adjustments related to each specific Acquired Company and Subsidiary. Seller shall within fifteen (15) days after receipt of such allocation give written notice to Buyer

of its agreement or disagreement with such allocation. If Seller objects to Buyer’s allocation, Seller shall give Buyer written notice of the objections and Seller and Buyer shall use reasonable efforts to resolve the differences. If within thirty (30) days after the date on which Seller has given Buyer notice of its objections, the parties have not adopted the allocation, any dispute related thereto shall be referred to the Accounting Referee and resolved thirty (30) days after such referral. The Accounting Referee’s determination shall be conclusive and binding upon Buyer and Seller. The costs, expenses, and fees of the Accounting Referee shall be borne equally by the parties. The resulting allocation, whether or not objected to by Seller or as determined by the Accounting Referee, is referred to as the “Allocation Agreement”.

(b) Buyer and Seller agree that Buyer and Seller will (i) be bound by the Allocation Agreement, (ii) act in accordance with the Allocation Agreement in the preparation of and filing of all Tax Returns, reports, forms, declarations or questionnaires (including, without limitation, filing Form 8594 with any federal income tax return for the taxable year that includes the Closing Date) and in the course of any tax audit, refund claim or litigation relating thereto and (iii) not take any position inconsistent with the Allocation Agreement for all Tax purposes. No later than thirty (30) days prior to the filing of their respective Forms 8594 relating to this transaction, each party shall deliver to the other party a copy of its completed Form 8594. In the event that such Allocation Agreement is disputed by any taxing authority, the party receiving such notice of such dispute shall promptly notify and consult with the other party hereto concerning resolution of such dispute, and no dispute shall be finally settled or compromised without the mutual consent of Seller and Buyer, which consent shall not be unreasonably withheld.

Each of Seller and Colfax, jointly and severally, hereby represents and warrants to Buyer as follows:

Each of Seller and Colfax has all requisite power and authority to enter into and perform the terms of this Agreement, the agreements and instruments referred to herein, and the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and of the agreements and instruments called for hereunder, and the consummation of the transactions contemplated hereby and by such agreements and instruments have been duly and validly authorized and approved by all necessary actions of each of Seller and Colfax, including all necessary board and stockholder consents. This Agreement constitutes, and upon execution and delivery, each other agreement and instrument contemplated hereby will constitute, a valid and binding agreement and obligation of each of Seller and Colfax enforceable against each of them in accordance with their respective terms, except as limited by (a) applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally from time to time in effect and (b) the availability of equitable remedies (regardless of whether enforceability is considered

in a proceeding at law or in equity). The execution, delivery and performance by the Seller and Colfax of this Agreement and the agreements and instruments called for hereunder will not require the consent, approval or authorization of any person, entity or governmental authority, other than as set forth in Schedule 3.01, and those consents, approvals and authorizations the failure of which to obtain would not be reasonably likely to result in a Material Adverse Effect.

Seller is the record and beneficial owner of all of the LLC Interests and has valid title to all of the LLC Interests, free and clear of all Liens, other encumbrances and adverse claims. Upon the consummation of the transactions contemplated by this Agreement in accordance with the terms hereof, Buyer will acquire valid title to all of the LLC Interests free and clear of all Liens, other encumbrances and adverse claims.

(a) Each Acquired Company and each Subsidiary is duly organized, validly existing and in good standing under the laws of their state or country of organization. Each Acquired Company and each Subsidiary is duly qualified to do business as a foreign entity and is in good standing in each jurisdiction in which the character of the property owned or leased by them or in which the conduct of their business requires them to be so qualified, except where such failures to be so qualified or licensed and in good standing that would not have a Material Adverse Effect. Seller has furnished to Buyer a true, correct and complete copy of the certificate of formation, certificate of incorporation, limited liability company agreement, bylaws, partnership agreement and other organizational documents, as applicable, of each Acquired Company and each Subsidiary, as amended to date and currently in effect, certified by their respective managing members, general partner or Secretary, as the case may be. Each Acquired Company and each Subsidiary has full power and authority to own, use and lease its properties and to conduct its business as such properties are owned, used or leased and as such business is currently conducted.

(b) Schedule 3.03(b) hereto sets forth for each Acquired Company and each Subsidiary (i) the legal name of such entity and (ii) its jurisdiction of formation or incorporation, as applicable. Other than the foregoing, PT does not own, directly or indirectly, any securities or other interests issued by any other Person nor does PT have any investment in any other entity except for United States government securities, certificates of deposit, or other cash equivalents and is not a partner or participant in any partnership or joint venture except as set forth on Schedule 3.03(b).

The authorized membership interests, partnership interests, shares of capital stock and other ownership interests, as the case may be, of each Acquired Company and each Subsidiary are as set forth on Schedule 3.04(a). The outstanding membership interests, partnership interests, shares of capital stock and other ownership interests, as the case may be, of each Acquired Company and each Subsidiary are as set forth on Schedule 3.04(b) (collectively, the “Interests”). Schedule 3.04(b) also sets forth the name of each holder of

Interests and the amounts held by each such holder. All of the Interests are duly and validly issued and outstanding and are fully paid and nonassessable (if applicable), and, as of the Closing Date, will be free of all Liens and pre-emptive rights and have been issued in compliance with all applicable federal and state laws. There are no authorized or outstanding options, warrants, rights or other agreements under which any Acquired Company or Subsidiary may be obligated to issue or sell any membership interests, partnership interests, shares of capital stock or other ownership interests, and there are no membership interests, partnership interests, shares of capital stock or other ownership interests of any Acquired Company or Subsidiary convertible or exchangeable for membership interests, partnership interests, shares of capital stock or other ownership interests of any Acquired Company or Subsidiary.

(a) Except as disclosed on Schedule 3.05(a), (i) there is no litigation or other material claim pending or, to Seller’s Knowledge threatened by, against, affecting or regarding Seller, any Acquired Company or any Subsidiary or their respective businesses, properties or assets, at law or in equity, before any federal, state, local or foreign court or any other governmental or administrative agency or tribunal or any arbitrator or arbitration panel, and (ii) there are no judgments, orders, rulings, charges, decrees, injunctions, notices of violation or other mandates against or affecting Colfax, Seller or any Acquired Company or Subsidiary with respect to the businesses, properties or assets of CPTG, any Acquired Company or any Subsidiary. Nothing listed on Schedule 3.05(a), either individually or when aggregated with other listings on such Schedule, could reasonably be expected to have a Material Adverse Effect.

(b) During the time the Acquired Companies and Subsidiaries were owned and operated by Seller, each of the Acquired Companies and the Subsidiaries has conducted and is conducting its business in material compliance with applicable federal, state, local and foreign laws, statutes, ordinances, regulations, rules or orders and other material requirements of any governmental, regulatory or administrative agency or authority or court or other tribunal relating to it (including, but not limited to, any law, statute, ordinance, regulation, rule, order or requirement relating to securities, properties, business, products, advertising, sales or employment practices, immigration, terms and conditions of employment, wages and hours, safety, occupational safety, health or welfare conditions relating to premises occupied, product safety and liability or civil rights) except where such failure to be in material compliance with applicable federal, state, local and foreign laws, statutes, ordinances, regulations, rules or orders and other material requirements of any governmental, regulatory or administrative agency or authority or court or other tribunal relating to it that would not have a Material Adverse Effect. To Seller’s Knowledge, none of the Acquired Companies nor any Subsidiary is now charged with, is not now under investigation with respect to, any possible violation of any applicable law, statute, ordinance, regulation, rule, order or requirement relating to any of the foregoing in connection with the Business, and, to Seller’s Knowledge, each of the Acquired Companies and each Subsidiary has filed all reports required to be filed with any Governmental Authority.

(c) Each of the Acquired Companies and the Subsidiaries has all licenses, permits, franchises, orders, approvals, accreditations, written waivers and other material

authorizations as are necessary in order to enable it to own and conduct the Business in all material respects as currently conducted and to occupy and use its real and personal properties except where the failure to have such licenses, permits, franchises, orders, approvals, accreditations, written waivers and other material authorizations which would not be reasonably likely to result in a Material Adverse Effect. To Seller’s Knowledge, no registration, filing, application, notice, transfer, consent, approval, order, qualification, waiver or other action of any kind is required by virtue of the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby to avoid the loss of any material rights pertaining to any such license, permit, franchise, order, approval, accreditation, waiver or authorization.

(a) Seller and Colfax have caused to be prepared and furnished to Buyer the audited combined balance sheets, statement of operations and comprehensive income, statement of changes in equity and statement of cash flows for Seller as of December 31, 2003 and 2002, and for the three years in the period ended December 31, 2003 (collectively, the “Seller Financial Statements”), copies of which are attached hereto as Schedule 3.06(a). The audited Seller Financial Statements, including the footnotes thereto, present fairly the financial position of the Seller as of such dates and the results of operations and cash flow for the respective periods indicated and are consistent with the books and records of the Acquired Companies and the Subsidiaries. CPTG is separately managed as part of Colfax Corporation and as such, certain assumptions had to be made in presenting the financial statements of CPTG. Therefore, the audited financial statements included herein may not reflect the combined financial position, operating results, and the cash flows of CPTG in the future or what they would have been had CPTG been a separate, independent entity during the periods presented. The Seller Financial Statements have been prepared in accordance with Generally Accepted Accounting Principles, in accordance with past practices on a consistent basis throughout the periods covered thereby. The audited Seller Financial Statements are accompanied by the related report of Ernst & Young LLP, independent certified public accountants.

(b) Seller and Colfax caused to be prepared and furnished to Buyer (i) the unaudited, pro forma, combined balance sheets, income statements, statement of changes in equity and statement of cash flows for CPTG as of December 31, 2003 and 2002 and for the two years in the period ended December 31, 2003, (ii) the unaudited, pro forma, combined balance sheets, income statements, statement of changes in equity and statement of cash flows for CPTG for the nine month period ended September 30, 2004 (collectively, the “Financial Statements”), copies of which are attached hereto as Schedule 3.06(b). The Financial Statements (i) have been prepared in accordance with Generally Accepted Accounting Principles (except for the absence of footnotes thereto and other presentation items and subject to normal and customary year-end audit adjustments), (ii) have been prepared on the basis described on Schedule 3.06(b), and (iii) present fairly the financial position of CPTG as of such dates and the results of operations on a pro forma basis for the respective periods indicated. CPTG is separately managed as part of Colfax Corporation and as such, certain assumptions had to be made in presenting the financial statements of CPTG. Therefore, the Financial Statements included herein may not reflect the combined financial position, operating results, and the cash flows of CPTG in the future or what they would have been had CPTG been a separate, independent entity during the periods presented.

(c To Seller’s Knowledge, there are no significant deficiencies in the design or operation of internal controls that would be reasonably likely to materially adversely affect CPTG’s ability to record, process, summarize and report financial data and there have been no significant changes in internal controls since December 31, 2003.

(a) Schedule 3.07(a) contains a true and complete listing of all franchises, licenses, trademarks, trademark registrations and applications, trade names, patents, patent applications, patent licenses, software licenses (excluding licenses for commercially available software pursuant to commercially reasonable terms for a license fee of no more than $10,000), service marks, service mark registrations and applications, copyright registrations and applications and domain names owned by the Acquired Companies and the Subsidiaries (“Scheduled Intellectual Property”). To Seller’s Knowledge, the Acquired Companies or one of the Subsidiaries is the sole and exclusive owner of, or has valid and continuing rights to use, sell and license, as the case may be, the Scheduled Intellectual Property and all other intellectual property and software, including trade secrets, (the Scheduled Intellectual Property and all other intellectual property of the Acquired Companies and the Subsidiaries collectively referred to as “Intellectual Property”) used, sold or licensed by the Acquired Companies or the Subsidiaries in their businesses as currently conducted, free and clear of all Liens. Except as set forth in Schedule 3.07(a), (i) no other Person has an interest in or right or license to use, or the right to license any other Person to use, any of the Intellectual Property of the Acquired Companies or the Subsidiaries, (ii) there are no claims or demands of any other Person pertaining to any of the Intellectual Property of the Acquired Companies or the Subsidiaries and no proceedings have been instituted, or are pending or, to Seller’s Knowledge, threatened, which challenge any Acquired Company’s or Subsidiary’s rights in respect thereof or which challenge the validity thereof, (iii) to Seller’s Knowledge, none of the Intellectual Property of any Acquired Company or any Subsidiary is being infringed or has been misappropriated by another Person, (iv) none of the Intellectual Property of any Acquired Company or any Subsidiary is subject to any outstanding order, decree, ruling, charge, injunction, judgment or stipulation, (v) no Claim has been made and is currently pending or is threatened charging any Acquired Company or any Subsidiary with infringement or misappropriation of any intellectual property of any other Person and (vi) to Seller’s Knowledge, the operation of the Acquired Companies’ and the Subsidiaries’ respective businesses, as currently conducted by each of them, including the manufacture, use, sale, importation, possession, disclosure, copying, licensing or distribution of any products, services or Intellectual Property, does not infringe, misappropriate, violate or otherwise conflict with any patent, trademark, copyright, trade secret or any other intellectual property right of any other Person.

(b) To Seller’s Knowledge, each of the Acquired Companies and the Subsidiaries has the right to use, free and clear of any litigation or claims or rights of any other Person, all trade secrets, customer lists, manufacturing and secret processes and know-how (if any) required for or used in the manufacture or marketing of all products services being sold, provided, manufactured, or under development by it, including products licensed from other Persons. Any payments required to be made by any Acquired Company or any Subsidiary for the use of such trade secrets, customer lists, manufacturing and secret processes and know-how are described in Schedule 3.07(b). To Seller’s Knowledge, no Acquired Company or Subsidiary is in any way making an unlawful or wrongful use of any confidential information, know-how, or

trade secrets of any other Person, including without limitation any former employer of any present or past employee of Seller, any Acquired Company or any Subsidiary.

(a) Except as disclosed on Schedule 3.08(a), each of the Acquired Companies and the Subsidiaries has good and marketable title to, or a valid leasehold interest in, the property and assets used and necessary in the Business as it is currently conducted or reflected in the Financial Statements. At the Closing, the property and assets of the Acquired Companies and the Subsidiaries will constitute all material rights, properties, and other assets that are necessary to conduct the Business as it was conducted in the Ordinary Course of Business immediately prior to the Closing. To Seller’s Knowledge, all material tangible personal property owned by the Acquired Companies and Subsidiaries is in good working order and condition, ordinary wear and tear excepted.

(b) Real Property listed on Schedule 3.08(b) comprises all real property owned or leased by the Acquired Companies or the Subsidiaries in the conduct of the Business. With respect to each such parcel of Real Property owned by the Acquired Companies or the Subsidiaries, (i) there are no pending or, to Seller’s Knowledge, threatened condemnation proceedings, lawsuits, or administrative actions relating to the property or other matters affecting the current use or occupancy thereof, (ii) there are no leases, subleases, licenses, concessions, or other agreements, written or oral, granting to any party or parties the right to use or occupy any portion of the parcel of real property, except as disclosed on Schedule 3.08(b)(ii), and (iii) there are no outstanding options or rights of first refusal to purchase the parcel of real property, or any portion thereof or interest therein.

(c) To Seller’s Knowledge, Schedule 3.08(c) contains a complete list of all leases and subleases pursuant to which the Acquired Companies or the Subsidiaries lease personal property for the Acquired Companies that require payment of One Hundred Thousand Dollars ($100,000) or more per year. All leases listed on Schedule 3.08(c) are valid and binding against the applicable Acquired Company or Subsidiary, except as limited by any applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to general principles of equity (whether or not considered in a court of law or equity), and, to Seller’s Knowledge, are in full force and effect. All material leased personal property of the Acquired Companies and the Subsidiaries is in the condition required of such property by the terms of the lease or sublease applicable thereto.

The execution and delivery of this Agreement and the agreements and instruments called for hereunder, the fulfillment of and the compliance with the respective terms and provisions of each, and the consummation of the transactions described in each, do not conflict with or result in the violation of any law, ordinance, regulation, order, judgment, injunction or decree applicable to Colfax, Seller, any Acquired Company or any Subsidiary or conflict with or result in a breach of or constitute a default under any of the terms, conditions or provisions of any organizational documents of Colfax, Seller, any Acquired Company or any Subsidiary or any material contract, agreement, lease, commitment, permit or understanding to

which Colfax, Seller, any Acquired Company or any Subsidiary is a party or by which any such party is bound, or result in the acceleration of, or obligation to make any material payment or any material indebtedness of such parties or in the creation of any material encumbrance or Lien upon the assets of the Acquired Companies or the Subsidiaries, except where such conflicts, violations, breach, default or acceleration would not reasonably be expected to result in a Material Adverse Effect.

(a) Except as disclosed on Schedule 3.10(a), all Tax Returns of or with respect to the Acquired Companies or the Subsidiaries (or any Affiliated Group of which any of the Acquired Companies or the Subsidiaries is or was a member) required to be filed have been timely filed or timely requests for extensions of time to file have been filed (and such Tax Returns have been filed within the period set by such extension), and such returns are true, correct and complete in all material respects. All Taxes payable by or with respect to the Acquired Companies or the Subsidiaries (or any Affiliated Group of which any of the Acquired Companies or the Subsidiaries is or was a member) which have become due have been fully and timely paid or have been adequately reserved on the Financial Statements in accordance with GAAP.

(b) Except as disclosed on Schedule 3.10(b), Schedule 3.10(b) lists all income and franchise, and all other filed Tax Returns which generally report at least either $100,000 of Taxes due or $100,000 of revenue on an annual basis filed with respect to the Acquired Companies and the Subsidiaries. Seller has made available to Buyer or its representatives complete copies of the relevant portions of all income and franchise, and other such Tax Returns of, examination reports relating to, and statements of deficiencies assessed against or agreed to by, the Acquired Companies or the Subsidiaries.

(c) The Acquired Companies and the Subsidiaries are not a party to any pending action or proceeding, and, to Seller’s Knowledge, there is no action or proceeding threatened by any government or authority against the Acquired Companies or the Subsidiaries for assessment or collection of Taxes.

(d) Except as disclosed on Schedule 3.10(d), neither the Acquired Companies, the Subsidiaries nor any Person on their behalf have waived any statute of limitations in respect of Taxes or agreed to, or become a party to, any extension of time with respect to a Tax assessment or deficiency or the period for filing any Tax Return.

(e) Except as disclosed on Schedule 3.10(e), all deficiencies asserted or assessments made as a result of any examinations by any Governmental Authority of the Tax Returns of, or with respect to the Acquired Companies or the Subsidiaries have been fully paid. The Company has not received any notice from any Governmental Authority that it intends to conduct such an audit or investigation. To Seller’s Knowledge, no issue has been raised by a Governmental Authority in any prior examination of, or relating to, the Acquired Companies or the Subsidiaries which, by application of the same or similar principles, would reasonably be expected to result in a proposed deficiency or affect the Tax treatment of the Acquired Companies or the Subsidiaries for any subsequent taxable period.

(f) Except as disclosed on Schedule 3.10(f), none of the Acquired Companies or the Subsidiaries have been a member of an Affiliated Group other than the Affiliated Group of which Colfax, an Acquired Company or Subsidiary is the common parent, and the Acquired Companies and the Subsidiaries do not have any liability for Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any comparable provision of state, local or foreign Law) (other than as a member of such group).

(g) The Acquired Companies and the Subsidiaries have complied in all material respects with all applicable Laws relating to the payment and withholding of Taxes and have duly and timely withheld and paid over to the appropriate Governmental Authorities all material amounts required to be so withheld and paid over under all applicable Laws.

(h) No claim has been made by a Governmental Authority in a jurisdiction in which the Acquired Companies or the Subsidiaries do not currently file a Tax Return such that the Acquired Companies or the Subsidiaries may be subject to taxation by that jurisdiction.

(i) There are no Liens for Taxes upon the Assets of the Acquired Companies or the Subsidiaries.

(j) None of the Acquired Companies or the Subsidiaries are subject to private letter rulings of the Internal Revenue Service.

(k) Neither the Acquired Companies, the Subsidiaries nor any Person on their behalf have (i) agreed, are required or have any application pending, to make any adjustment pursuant to Section 481(a) of the Code or any similar provision of Law or have received notice that any Governmental Authority has proposed any such adjustment, (ii) executed or entered into a closing agreement pursuant to Section 7121 of the Code or any similar provision of Law or (iii) granted to any Person any power of attorney that is currently in force with respect to any Tax matter.

(l) Except as disclosed on Schedule 3.10(l), none of the property owned by the Acquired Companies or the Subsidiaries is (i) property required to be treated as being owned by another Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect immediately prior to the enactment of the Tax Reform Act of 1986, (ii) “tax-exempt use property” within the meaning of Section 168(h)(1) of the Code, (iii) “tax-exempt bond financed property” within the meaning of Section 168(g) of the Code, (iv) “limited use property” within the meaning of Rev. Proc. 2001-28, (v) subject to Section 168(g)(1)(A) of the Code, or (vi) subject to any provision of state, local or foreign Law comparable to any of the provisions listed above.

(m) Except as disclosed on Schedule 3.10(m), none of the Acquired Companies or the Subsidiaries are a party to or bound by any tax sharing, allocation, indemnity or similar agreement or arrangement (whether or not written) pursuant to which Buyer or any of its Affiliates (including the Acquired Companies and the Subsidiaries) will have any obligation to make any payments after the Closing.

(n) None of the Acquired Companies or the Subsidiaries have constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under

Section 355 of the Code (i) in the two (2) years prior to the date of this Agreement or (ii) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the transactions contemplated by this Agreement.

(o) None of the Acquired Companies or Subsidiaries created under the laws of the United States has a permanent establishment other than in the United States, except to the extent of entities which are disregarded as separate from their owner under Treasury Regulation Section 301.7701-3. None of the Acquired Companies or the Subsidiaries created under the laws of a jurisdiction other than the United States has a permanent establishment in any jurisdiction other than the jurisdiction in which they were created or organized.

(p) None of the Acquired Companies or Subsidiaries was a passive foreign investment company, within the meaning of Section 1297, during the period equity in such entity was held, directly or indirectly, by the Seller or its predecessors.

(q) To the extent that any of the Acquired Companies or the Subsidiaries were treated as an “S corporation” or “Qualified Subchapter S Subsidiaries,” as applicable, within the meaning of Section 1361 of the Code, on any Tax Return for any taxable period, such Acquired Companies or the Subsidiaries qualified for such treatment for federal income purposes.

(r) For U.S. federal income tax purposes, Ameridrives Enterprises MPT Holdings L.P. and Ameridrives International L.P. have always qualified for treatment as a partnership, and to the extent that any of the Acquired Companies or the Subsidiaries were treated as entities disregarded as separate from their owners, as applicable, on any Tax Return for any taxable period, such Acquired Companies or the Subsidiaries qualified for such treatment for federal income tax purposes.

(a) Schedule 3.11(a) sets forth a true and complete list of all “employee benefit plans” (within the meaning of Section 3(3) of ERISA, including, without limitation, multiemployer plans within the meaning of Section 3(37) of ERISA), all severance pay, salary continuation, change in control, retention, material employment or material consulting, bonus, equity, pension, redundancy, profit sharing, deferred compensation, employee loan, retiree welfare, fringe benefit and all other employee benefit plans, programs, agreements, policies or arrangements, in each case including any funding mechanism now in effect, whether or not subject to ERISA, whether formal or informal, under which (i) any current or former employee, director, officer, independent contractor or consultant of the Acquired Companies or the Subsidiaries has any present or future right to benefits and which are contributed to, entered into, sponsored by or maintained by Colfax, Seller, the Acquired Companies or the Subsidiaries, or any member of their respective Controlled Group (as defined below), or (ii) the Acquired Companies or the Subsidiaries have had or have any present or, to Seller’s Knowledge, future liability (each, a “Company Benefit Plan”). Schedule 3.11(a) separately identifies each Company Benefit Plan that is maintained in the United States (each, a “Company U.S. Benefit Plan”), and each Company Benefit Plan that is not a Company U.S. Benefit Plan (each, a “Company Foreign Benefit Plan”).

(b) Current, accurate and complete copies (or, as to clause (i) of this sentence, to the extent no copy exists, an accurate description) of the following materials have been made available to Buyer with respect to each Company Benefit Plan, to the extent applicable: (i) current plan documents, any amendments and any related trust agreement, group annuity contract or other funding instrument, (ii) the most recent determination letter from the Internal Revenue Service (“IRS”), (iii) the most recent summary plan description and summary of material modifications to the extent not included in the summary plan description in each case distributed to employees, and (iv) for the two (2) most recent years (A) the Form 5500 and attached schedules, (B) audited financial statements and (C) actuarial valuation reports.

(c) Except as set forth in Schedule 3.11(c): (i) the Company Benefit Plans have been established and administered in compliance in all material respects with their terms and the applicable requirements of ERISA, the Code, and other applicable Laws; (ii) each Company Benefit Plan and related trust that is intended to be qualified within the meaning of Section 401 or 501, as applicable, of the Code is so qualified and has received or has timely applied for a favorable determination letter as to its qualification, and nothing has occurred, whether by action or failure to act, that could reasonably be expected to cause the loss of such qualification; (iii) no event has occurred and no condition exists that would subject the Acquired Companies or the Subsidiaries, either directly or by reason of their affiliation with any member of their “Controlled Group” (defined as any organization which is a member of a controlled group of organizations within the meaning of Sections 414(b), (c) (m) or (o) of the Code, or which would be considered to be a single employer with that entity pursuant to Section 4001(b) of ERISA), to any material tax, fine, lien, penalty or other liability imposed by ERISA, the Code or other applicable Laws; (iv) no “reportable event” (as such term is defined in Section 4043 of the Code), non-exempt “prohibited transaction” (as such term is defined in Section 406 of ERISA and Section 4975 of the Code), or “accumulated funding deficiency” (as such term is defined in Section 302 of ERISA and Section 412 of the Code (whether or not waived)) has occurred with respect to any Company Benefit Plan; (v) all premiums due to the Pension Benefit Guaranty Corporation (“PBGC”) have been timely paid in full; and (vi) no liability (other than for premiums to the PBGC) under Title IV of ERISA has been or could reasonably be expected to be incurred by any of the Acquired Companies or the Subsidiaries.

(d) No insurance policy funding any Company Benefit Plan provides for a retroactive rate adjustment or loss sharing arrangement that would result in material liability to Buyer, the Acquired Companies or the Subsidiaries.

(e) Except as set forth in Schedule 3.11(e), no Company Benefit Plan is a “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA), and neither the Acquired Companies nor the Subsidiaries, nor any member of their Controlled Group, has at any time in the preceding six years withdrawn from a multiemployer plan.

(f) With respect to any Company Benefit Plan, except as set forth in Schedule 3.11(f): (i) there are no pending or, to Seller’s Knowledge, threatened claims or proceedings, other than routine claims for benefits in the ordinary course by participants and beneficiaries; (ii) to Seller’s Knowledge, no facts or circumstances exist that could give rise to any such claims or proceedings; (iii) no written or oral communication has been received from the PBGC in respect of any Company Benefit Plan subject to Title IV of ERISA concerning the funded status of any such plan or any transfer of assets and liabilities from any such plan in

connection with the transactions contemplated herein; and (iv) no administrative investigation, audit or other proceeding by the Department of Labor, the PBGC, the IRS or other Governmental Authorities is pending, to Seller’s Knowledge, threatened, or in progress (including, without limitation, amnesty proceedings or any routine requests for information from the PBGC).

(g) Except as set forth in Schedule 3.11(g), no Company Benefit Plan exists that, as a result of the execution of this Agreement or the transactions contemplated by this Agreement (whether alone or in connection with any other events), would (i) entitle any Continuing Employee to severance pay or any increase in severance pay upon any termination of employment after the date of this Agreement or (ii) with respect to any Company Employee (and except as specifically contemplated herein), accelerate the time of payment or vesting or result in any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or result in any other material obligation pursuant to, any of the Company Benefit Plans.

(h) Except as set forth in Schedule 3.11(h), there is no contract, plan or arrangement (written or otherwise) covering any Continuing Employee that, individually or collectively, could give rise to the payment of any amount that would be nondeductible pursuant to Section 280G of the Code or could give rise to the payment of any amount in respect of Code Section 4999, nor will any of the transactions contemplated by this Agreement result in any amounts that are not deductible pursuant to Section 280G of the Code or the payment of any amount in respect of Code Section 4999.

(i) Except as set forth in Schedule 3.11(i) none of the Acquired Companies or the Subsidiaries has employed or employs any “leased employees” as defined in Section 414(n) of the Code.

(j) Except as set forth in Schedule 3.11(j), with respect to each Company Foreign Benefit Plan: (i) each such plan that is intended to be tax qualified or tax registered is so qualified or registered, and nothing has occurred, whether by action or failure to act, that could reasonably be expected to cause the loss of such qualification or registration; (ii) all Company Foreign Benefit Plans that are required to be funded are fully funded, and with respect to all other Company Foreign Benefit Plans, adequate reserves have been established on the accounting statements of the applicable Acquired Company or Subsidiary; and (iii) no material liability or obligation of the Acquired Companies or the Subsidiaries exists with respect to such Company Foreign Benefit Plans that has not been disclosed on Schedule 3.11(j).

(k) All contributions (including all employer contributions and employee salary reduction contributions) to and payments from any Company Benefit Plan in respect of any Continuing Employee that are required in accordance with the terms of such Company Benefit Plan, any related document, the Code or ERISA have been timely made, or, if not yet due, have been properly reflected in the Financial Statements; and (ii) all such contributions to, and payments from, any Company Benefit Plan, except those to be made from a trust qualified under Section 401(a) of the Code, that are required to be made as of the Closing Date will be made on or prior to the Closing Date.

Set forth in Schedule 3.12 is a list, as of the date hereof, of the following agreements that relate to the Acquired Companies and the Subsidiaries (the “Company Contracts”):

(a) Each agreement to which any Acquired Company or Subsidiary is a party, requiring payments in excess of Five Hundred Thousand Dollars ($500,000) in any twelve month period;

(b) Each agreement covering the lease, purchase or service of tangible personal property to which any Acquired Company or Subsidiary is a party, requiring payment in excess of Five Hundred Thousand Dollars ($500,000) in any twelve month period;

(c) Each agreement to which any Acquired Company or Subsidiary is a party, with respect to indebtedness for money borrowed, including letters of credit, guaranties, indentures, swaps and similar agreements;

(d) Each management, consulting, employment, severance, collective bargaining or similar agreement, to which any Acquired Company or Subsidiary is a party, other than (i) agreements terminable at will without any penalty or other payment and (ii) the success fee agreements entered into between Colfax and certain employees (which shall be paid by Colfax);

(e) Each material agreement with any manufacturer’s representative, distributor, sales agent or OEM partner which generated revenues in excess of $1 million dollars during the last twelve (12) months;

(f) Each contract or agreement for the sale of any commodity, product, material, equipment, or other personal property, or the furnishing by any Acquired Company or Subsidiary of any service, other than contracts with customers entered into in the Ordinary Course of Business;

(g) Each plan or contract regarding or providing for bonuses, pensions, options, stock purchases, deferred compensation, severance benefits retirement payments, profit sharing, stock appreciation, collective bargaining or the like, or any contract or agreement with any labor union;

(h) Each material contract or agreement providing for the purchase of all or substantially all of its requirements of a particular product from a supplier, or for periodic minimum purchases of a particular product from a supplier;

(i) Each contract or agreement concerning a partnership or joint venture with one or more Persons;

(j) Each confidentiality agreement or any non-competition agreement or other contract or agreement containing covenants limiting the freedom of any Acquired Company or Subsidiary to compete in any material CPTG line of business in any location or with any Person, other than immaterial agreements entered into in the Ordinary Course of

Business and standard OEM agreements entered into in the Ordinary Course of Business which contain customary limitations;

(k) Each material license agreement (as licensor or licensee);

(l) Each material agreement of guaranty, indemnification, or other similar commitment with respect to the obligations or liabilities of any other Person (other than lawful indemnification provisions contained in the charters, bylaws or other formation documents of the Acquired Companies and the Subsidiaries);

Each of the Company Contracts is valid, binding and enforceable against the Acquired Company or Subsidiary, as the case may be, in accordance with its terms, except as limited by any applicable bankruptcy, reorganization, insolvency, moratorium or together similar laws affecting the enforcement of creditors’ rights generally and subject to general principles of equity (whether or not considered in a court of law or equity), and is in full force and effect. To Seller’s Knowledge, there are no existing material defaults by any Acquired Company or Subsidiary under any of the Company Contracts and, to Seller’s Knowledge, no event has occurred (whether with or without notice, lapse of time or the happening or occurrence of any other event) would constitute a material default under any of the Company Contracts by any other party thereto.

Except as set forth in Schedule 3.13 and except for the Known Environmental Conditions:

(a) Since the date it became owned by Colfax, Seller or an Affiliate, the Acquired Companies and the Subsidiaries, have been and are in compliance in all material respects with all Environmental Laws, which compliance includes obtaining, maintaining and complying with all Permits required by Environmental Laws (collectively, Environmental Permits”), except for such non-compliance that would not reasonably be expected to have a Material Adverse Effect. A true and correct list of all such Environmental Permits currently maintained by the Acquired Companies and the Subsidiaries is set forth in Schedule 3.13.

(b) To Seller’s Knowledge, there is no material contamination at, on, or under the Real Property or any property formerly owned, operated or leased by any of the Acquired Companies or Subsidiaries that requires investigation, monitoring, remediation or removal pursuant to Environmental Laws, which would reasonably be expected to have a Material Adverse Effect.

(c) Except for matters that would not reasonably be expected to have a Material Adverse Effect, since the date it became owned by Colfax, Seller or an Affiliate, no Acquired Company or Subsidiary has received a written information request or notice of potential responsibility from a Governmental Authority or has received notice that it is the subject of any pending or, to Seller’s Knowledge, threatened claim, demand, proceeding, suit, investigation, action, cause of action, complaint, directive, or citation from any Governmental

Authority or Person arising out of or related to any of the following matters: (i) the investigation, monitoring, remediation, removal, or release of, or exposure to, Hazardous Substances at, on, under, above, from, or about any Real Property; (ii) the off-site release, treatment, transportation, storage or disposal of Hazardous Substances originating from the business or assets of the Acquired Companies or Subsidiaries; or (iii) any violations or alleged violations of Environmental Laws or Environmental Permits.

(d) During the period that Colfax owned and operated the Acquired Companies and Subsidiaries, none of the Acquired Companies or the Subsidiaries has manufactured or otherwise distributed into commerce any product containing asbestos.

(e) Seller and Colfax have made available or provided and delivered to Buyer copies of all material environmental health and safety assessments, audits, investigations, documents and reports, including the EKI Documents, to the extent in Seller’s or the Acquired Companies’ possession, custody or control that relate to any environmental or Hazardous Material Claim involving the Acquired Companies or the Subsidiaries, the environmental condition of the Real Property or compliance with Environmental Laws by the Acquired Companies and the Subsidiaries.

Notwithstanding any other provision of this Agreement, this Section 3.13 sets forth the sole and exclusive representations and warranties of Seller and Colfax with respect to Environmental Laws, Hazardous Substances or any environmental matter.

3.14 Bank Accounts; Accounts Receivable.

Schedule 3.14 is an accurate list of all bank accounts, safe deposit boxes and lock boxes maintained by each Acquired Company and Subsidiary and the authorized signatories therefor. Except as set forth in Schedule 3.14 attached hereto, none of the Acquired Companies or Subsidiaries has any accounts receivable or loans or notes receivable from any Affiliates or from any of its officers, directors, consultants, employees, agents or equityholders. The accounts receivable reflected on the Financial Statements arise from sales related to the Business.

Except for the compensation payable to Merrill Lynch & Co., Inc. in connection with the transactions contemplated by this Agreement, which is to be paid solely by Colfax, no broker, finder or similar agent has been retained by or to act on behalf of Seller or Colfax, and no Person other than Merrill Lynch & Co., Inc. is entitled to any brokerage commission, finder’s fee or any similar compensation for services provided to Colfax, Seller, the Acquired Companies or the Subsidiaries in connection with this Agreement or the transactions contemplated hereby.

(a) Except as set forth in Schedule 3.16(a), (i) none of the Acquired Companies or the Subsidiaries is a party to any collective bargaining agreement nor is any such contract or agreement presently being negotiated, (ii) none of the Acquired Companies or the

Subsidiaries is in material breach of any collective bargaining agreement, (iii) within the past three (3) years, there has been no labor strike, work stoppage, or lockout in effect, or, to Seller’s Knowledge, threatened against the Acquired Companies or the Subsidiaries, (iv) to Seller’s Knowledge, there are no material grievances or other material labor disputes or proceedings pending or threatened against the Acquired Companies or the Subsidiaries or involving any Continuing Employee, (v) there are no material unfair labor practice charges, grievances or complaints, actions, inquiries, proceedings or investigations pending or, to Seller’s Knowledge, threatened against the Acquired Companies or the Subsidiaries by or on behalf of any Continuing Employee and (vi) the Acquired Companies and the Subsidiaries are in compliance with their obligations pursuant to the Worker Adjustment and Retraining Notification Act of 1988 (“WARN Act”), and all other notification and bargaining obligations arising under any collective bargaining agreement or statute. Except as disclosed in Schedule 3.16(a), there are no organizing activities (including any demand for recognition or certification proceedings) pending or, to Seller’s Knowledge, threatened to be brought or filed with the U.S. National Labor Relations Board or other labor relations tribunal or any Governmental Authority involving an Acquired Company or a Subsidiary.

(b) The Acquired Companies and the Subsidiaries and, with respect to the Business, Seller and its subsidiaries are in material compliance with all applicable Laws, governmental orders, agreements, contracts and policies relating to the employment of their respective employees, including all such Laws and governmental orders relating to wages, hours, collective bargaining, compensation, benefits, terms and conditions of employment, termination or employment, employment discrimination, immigration, disability, civil rights, occupational safety and health, workers’ compensation, pay equity and the collection and payment of withholding and/or social contribution taxes and similar Taxes.

(c) No Acquired Company or Subsidiary is, and, with respect to the Business, nor is Colfax, Seller or any of their subsidiaries, a party to or otherwise bound by, any consent decree with, or citation by, any Governmental Authority related to employees or employment practices.

3.17 No Undisclosed Liabilities.

Except as set forth in the balance sheet dated September 30, 2004 (the “Balance Sheet Date”) and delivered pursuant to Section 3.06 hereto, there are no material liabilities of any Acquired Company or Subsidiary other than (i) liabilities set forth on Schedule 3.17, (ii) liabilities that will be provided for in the Closing Statement which were incurred in the Ordinary Course of Business since the Balance Sheet Date in accordance with the terms of this Agreement; (iii) the Retained Liabilities, (iv) liabilities specifically disclosed herein on any schedule hereto in a manner sufficient for a reasonably prudent person to understand that a liability exists, and (v) other non-material undisclosed liabilities which would not have a Material Adverse Effect.

3.18 Debt Instruments.

Schedule 3.18 lists all material mortgages, indentures, notes, guarantees and other agreements for or relating to borrowed money (including, without limitation, conditional

sales agreements and capital leases) to which any Acquired Company or Subsidiary is a party as debtor or guarantor or which have been assumed by any Acquired Company or Subsidiary or to which any assets of any Acquired Company or Subsidiary are subject. Each Acquired Company and Subsidiary has performed all the material obligations required to be performed by any of them to date and is not in material default in any respect under any of the foregoing, and there has not occurred any event which (whether with or without notice, lapse of time or the happening or occurrence of any other event) would constitute such a default.

Except as contemplated by or in connection with this Agreement or as permitted by Section 5.01 or set forth on Schedule 3.19, since the Balance Sheet Date:

(a) there has not been any damage, destruction or loss whether or not covered by insurance, with respect to the property and assets of the Acquired Companies or the Subsidiaries having a replacement cost of more than One Hundred Thousand Dollars ($100,000) for any single loss;

(b) there has not been any material change by any Acquired Company or any Subsidiary in accounting or Tax reporting principles, methods or policies;

(c) no Acquired Company and no Subsidiary has entered into any transaction or contract or incurred any obligation or liability involving the expenditure of more than One Hundred Thousand Dollars ($100,000) or conducted its business other than in the Ordinary Course of Business;

(d) no Acquired Company and no Subsidiary has mortgaged, pledged or subjected to any Lien any asset, or acquired any assets or sold, assigned, transferred, conveyed, leased or otherwise disposed of any of its assets for which the aggregate consideration paid or payable in any individual transaction was in excess of One Hundred Thousand Dollars ($100,000) other than in the Ordinary Course of Business;

(e) no Acquired Company and no Subsidiary has canceled or compromised any debt or claim with a value, individually or in the aggregate, exceeding One Hundred Thousand Dollars ($100,000) or amended, canceled, terminated, relinquished, waived or released any contract or right involving the expenditure of more than One Hundred Thousand Dollars ($100,000) other than in the Ordinary Course of Business;

(f) there has not been any material write-down or write-up of the value of any inventory or equipment of any Acquired Company or Subsidiary other than in the Ordinary Course of Business;

(g) no Acquired Company and no Subsidiary has made or committed to make any capital expenditures or capital additions or betterments in excess of One Hundred Thousand Dollars ($100,000), other than in the Ordinary Course of Business;

(h) no Acquired Company and no Subsidiary has instituted or settled any legal proceeding in which equitable relief was sought or in which claimed damages exceeded One Hundred Thousand Dollars ($100,000);

(i) to Seller’s Knowledge, there has not been any change in the business, assets, properties, results of operations, or condition (financial or otherwise) of any Acquired Company or Subsidiary that, by itself or in conjunction with all other such changes, has been or is reasonably likely to have a Material Adverse Effect (including, by way of example and not of limitation, the loss of any significant distributor, customer or vendor, any announcement of new material competitive developments, or the announced intention on the part of any key employee of any Acquired Company or Subsidiary to leave employment);

(j) there has not been any postponement or delay in payment of any material accounts payable or other material liability of any Acquired Company or any Subsidiary other than in the Ordinary Course of Business;

(k) there has been no increase in the compensation or benefits payable or to become payable to any officer or employee, no amendment of any Company Benefit Plan, and no establishment of any new Company Benefit Plan, other than (i) in the Ordinary Course of Business or (ii) to comply with Law;

(l) there have been no labor strikes, work stoppages or lockouts against the Acquired Companies or the Subsidiaries;

(m) there have been no resignations of employment by or terminations of employment of any member of the executive management team of CPTG; and

(n) other than in connection with the corporate reorganization of CTPG in 2004, there have been no issuances of any ownership interests by any Acquired Company or Subsidiary or material changes to the organizational documents of any Acquired Company or Subsidiary.

Schedule 3.20 attached hereto sets forth a summary of all insurance policies (including policies providing property, casualty, liability, and workers’ compensation coverage, benefits or coverage for any plan described in Section 3.11, and bond and surety arrangements) to which any Acquired Company or Subsidiary has been a party, a named insured, or otherwise the beneficiary of coverage during the lesser of (i) the past three (3) years or (ii) the time that Colfax owned the Acquired Company or Subsidiary and specifies the insurer, the amount of coverage, type of insurance, expiration date, and any retroactive premium adjustments or other loss sharing arrangements. To Seller’s Knowledge, during the past three (3) years, CPTG’s insurance premiums have not materially increased disproportionately to increases in the insurance industry generally. During the past three (3) years, neither Colfax nor Seller has received notice of any rejected material insurance claims applicable to the Acquired Companies and Subsidiaries and, to Seller’s Knowledge, there have been no rejected material insurance claims.

The minute books of each Acquired Company and Subsidiary have previously been made available to Buyer and accurately record all material corporate or other actions required to be taken by the stockholders, members, managers, boards of directors and committees thereof, as applicable, from the date of organization through the date hereof.

Schedule 3.22 sets forth the ten (10) largest suppliers and ten (10) largest customers of the Business in the calendar year 2003 (the “Large Suppliers and Customers”). Except as reflected in Schedule 3.22, no supplier is a material sole source of supply to the Business. To Seller’s Knowledge, the relationships of each Acquired Company and Subsidiary with their suppliers and customers are good commercial working relationships and no Acquired Company or Subsidiary has received any written notice from any of the Large Suppliers and Customers that it intends to terminate its relationship with the Acquired Company or Subsidiary or that it intends to materially diminish the amount of products it purchases from CPTG.

Except as disclosed on Schedule 3.22, with respect to any material customer, competitor or supplier of any Acquired Company or Subsidiary, or any organization which has a material contract or arrangement with any Acquired Company or Subsidiary, no executive officer or director of any Acquired Company, Subsidiary or Affiliate of Colfax (i) owns, either individually or jointly, more than five percent (5%) of the outstanding capital stock of such business if it is a publicly traded company, (ii) owns any material interest in such business, or (iii) serves as an executive officer or director of such business.

To Seller’s Knowledge, during the last three (3) years, there have been no recalls ordered by any Government Authority with respect to any product manufactured by any Acquired Company or Subsidiary (collectively, “Company Products”) and no material customer complaints regarding any class of Company Products.

Buyer represents and warrants to Seller and Colfax as of the date hereof as follows:

Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

Buyer has all requisite power and authority to enter into and perform the terms of this Agreement, the agreements and instruments referred to herein, and the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and of the agreements and instruments called for hereunder, and the consummation of the transactions contemplated hereby and by such agreements and instruments have been duly and validly authorized and approved by all necessary actions of Buyer. This Agreement constitutes, and upon execution and delivery, each other agreement and instrument contemplated hereby will constitute, a valid and binding agreement and obligation of Buyer enforceable against it in accordance with their respective terms, except as limited by (a) applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally from time to time in effect and (b) the availability of equitable remedies (regardless of whether enforceability is considered in a proceeding at law or in equity).

There is no action, suit, investigation, claim, arbitration or litigation pending or, to the Knowledge of Buyer, threatened, that questions the validity of this Agreement or any action taken or to be taken by Buyer in connection herewith.

The LLC Interests are being purchased for Buyer’s own account and not with the view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act of 1933, as amended (the “Act”).

Buyer has specific knowledge and experience in financial and business matters related to the Business such that it is capable of evaluating the merits and risks of its purchase of the LLC Interests. Buyer is an “accredited investor” within the meaning of Rule 501 under the Act. Buyer understands and is able to evaluate its investment in the Business and is able to bear any economic risks associated with such investment (including, without limitation, the necessity of holding the LLC Interests for an indefinite period of time, inasmuch as the LLC Interests have not been registered under the Act or any state securities laws).

No broker, finder or similar agent has been retained by or to act on behalf of Buyer and no Person is entitled to any brokerage commission, finder’s fee or any similar compensation in connection with services provided to Buyer in connection with this Agreement or the transactions contemplated hereby.

Buyer has delivered to Seller complete and accurate copies of the commitment letter dated October 25, 2004 from Jefferies & Company, Inc. evidencing its commitment to provide the Buyer debt financing for the transactions contemplated by this Agreement (the “Financing Commitment”). The Financing Commitment has not been modified or terminated since delivery to Seller and the Financing Commitment remains in full force and effect in accordance with its terms. Upon the satisfaction of the conditions set forth in Article VI (except for those conditions not capable of being satisfied until Closing) and Buyer’s receipt of the funds contemplated by the Financing Commitment, Buyer will have sufficient funds available to deliver the Purchase Price and to consummate the transactions contemplated by this Agreement.

The purchase of the LLC Interests by the Buyer and the consummation of the transactions contemplated hereunder by the Buyer are not done in reliance upon any warranty or representation by, or information from, Seller, Colfax or Acquired Companies of any sort, oral or written, except the warranties or representations specifically set forth in the Agreement (including the schedules and exhibits hereto) and in any certificates required to be delivered to the Buyer by the Seller hereunder and thereunder.

From the date hereof until the Closing Date, except as contemplated by any other provision of this Agreement or as set forth in Schedule 5.01, unless Buyer consents in writing prior thereto, Seller shall cause each of the Acquired Companies and the Subsidiaries to operate in the Ordinary Course of Business.

Each Acquired Company and Subsidiary shall not, and Seller shall not cause or allow any Acquired Company or Subsidiary to:

(a) incur any indebtedness or issue any debt securities or assume, guarantee or endorse the obligations of any other Persons, except for obligations incurred in the Ordinary Course of Business;

(b) acquire or dispose of any assets except in the Ordinary Course of Business;

(c) enter into any agreements, commitments or contracts, except agreements, commitments or contracts made in the Ordinary Course of Business;

(d) engage in any transactions with, or enter into any contracts or agreements with, any Affiliates except as set forth on Schedule 5.01(d) or in the Ordinary Course of Business;

(e) other than in the Ordinary Course of Business, (i) materially increase the annual level of compensation of any employee of any Acquired Company or Subsidiary, (ii) materially increase the annual level of compensation payable or to become payable by any Acquired Company or Subsidiary to any of their respective executive officers, (iii) grant any unusual or extraordinary bonus, benefit or other direct or indirect compensation to any employee, director or consultant, (iv) materially increase the coverage or benefits available under any (or create any new) severance pay, termination pay, vacation pay, company awards, salary continuation for disability, sick leave, deferred compensation, bonus or other incentive compensation, insurance, pension or other employee benefit plan or arrangement made to, for, or with any of the Continuing Employees or otherwise modify or amend or terminate any such plan or arrangement or (v) enter into any employment, deferred compensation, severance, consulting, non-competition or similar agreement (or amend any such agreement) to which any Acquired Company or Subsidiary is a party or involving a director, officer or employee of any Acquired Company or Subsidiary in his or her capacity as a director, officer or employee of any Acquired Company or Subsidiary;

(f) except where the following will not have a Material Adverse Effect on the operations of the Acquired Companies after the Closing Date, make or rescind any election relating to Taxes, settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, or except as may be required by applicable Law or GAAP, make any material change to any of its methods of accounting or methods of reporting income or deductions for Tax or accounting practice or policy from those employed in the preparation of its most recent Tax Returns;

(g) subject to any Lien or otherwise encumber or permit, allow or suffer to be encumbered, any of the properties or assets (whether tangible or intangible) of any Acquired Company or Subsidiary;

(h) enter into any merger or consolidation with any corporation or other entity other than in connection with the consolidation of the Seller’s ownership of CPTG assets for purposes of the transactions contemplated herein;

(i) engage in any new business or invest in, make a loan, advance or capital contribution to, or otherwise acquire the securities of any other Person;

(j) cancel or compromise any material debt or claim or waive or release any material right of any Acquired Company or Subsidiary;

(k) enter into, modify or terminate any labor or collective bargaining agreement or, through negotiation or otherwise, make any commitment or incur any liability to any labor organization, other than in the Ordinary Course of Business;

(l) introduce any material change with respect to the operation of the Business, including any material change in the types, nature, composition or quality of products or services, or, other than in the Ordinary Course of Business;

(m) enter into any transaction or Contract, or modify or renew any existing Contract, which by reason of its size or otherwise is not in the Ordinary Course of Business;

(n) enter into any Contract, understanding or commitment that materially restrains, restricts, limits or impedes the ability of CPTG to operate or expand the Business, or the ability of Buyer to compete with or conduct any business or line of business in any geographic area other than standard OEM contracts entered into in the Ordinary Course of Business which contain customary limitations;

(o) enter into, adopt, amend or terminate any Contract relating to the compensation or severance of any of its employees, except to the extent required by Law or any existing agreements that have been previously disclosed to Buyer;

(p) declare, set aside, make or pay any non-cash dividend or other non-cash distribution other than in connection with the consolidation of the Seller’s ownership of CPTG assets for purposes of the transactions contemplated herein; or

(q) agree to do anything prohibited by this Section 5.01 or anything which would make any of the representations and warranties of Seller or Colfax in this Agreement untrue or incorrect in any material respect.

Each Acquired Company and Subsidiary shall, and Seller shall cause each Acquired Company or Subsidiary to use their reasonable commercial efforts to:

(a) (i) preserve its present business operations, organization (including, without limitation, management and the sales force) and goodwill of each Acquired Company and Subsidiary and (ii) preserve the present relationships with Persons having business dealings with any Acquired Company or Subsidiary (including, without limitation, customers and suppliers);

(b) maintain all of the material assets and properties of each Acquired Company and Subsidiary in their current condition, ordinary wear and tear excepted; and

(c) (i) maintain the books, accounts and records of each Acquired Company and Subsidiary in the Ordinary Course of Business, (ii) continue to collect accounts receivable and pay accounts payable utilizing normal procedures and without discounting or accelerating payment of such accounts, and (iii) comply with all contractual and other obligations applicable to the operation of each Acquired Company and Subsidiary.

(a) From the date hereof until the Closing, Seller shall cause each Acquired Company and Subsidiary to give Buyer and its representatives (including its attorneys, agents and lenders or other sources of financing), upon reasonable notice to Seller, access to the assets,

properties, books, records, agreements, employees and commitments of the Acquired Companies and the Subsidiaries and permit Buyer to make such inspections as it may reasonably require and to furnish Buyer during such period with all such information relating to the Acquired Companies and the Subsidiaries as Buyer may from time to time reasonably request.

(b) Any information provided to or obtained by Buyer pursuant to paragraph (a) above is “Information” as defined under the Confidentiality Agreement, dated May 13, 2004, among the Colfax and Buyer (the “Confidentiality Agreement”), and is to be held by Buyer in accordance with and be subject to the terms of the Confidentiality Agreement.

(c) Each of Seller, Colfax and Buyer agrees to be bound by and comply with the provisions set forth in the Confidentiality Agreement as if such provisions were set forth herein, and such provisions are hereby incorporated herein by reference.

Effective as of the Closing Date, Buyer shall cause the Acquired Companies and the Subsidiaries to continue to employ, on the terms required by Section 5.04, all individuals who are employed by the Acquired Companies and the Subsidiaries immediately prior to the Closing Date, including those who are on lay-off, leaves of absence, or short-term disability (collectively, “Continuing Employees”). Notwithstanding the foregoing, nothing contained in this Section 5.03 shall require Buyer to continue to employee any individual after the Closing Date.

(a) In General. Buyer shall cause each Continuing Employee who remains employed after the Closing Date to have employment terms and conditions including compensation and employee benefits which, in the aggregate, are at least as favorable to such Continuing Employee as to those provided to the Continuing Employees immediately prior to the Closing Date. Compensation and benefits shall not be decreased for a period of at least 12 months following the Closing Date for any Continuing Employee employed during that period except as a result of collective bargaining. Buyer shall assume all of the Acquired Companies’ obligations to Continuing Employees, including, but not limited to, assumption of certain employee transition agreements described on Schedule 5.04(a) (the “Transition Agreements”). Subject to the foregoing and the other provisions of this Section 5.04, Buyer has the right to determine the compensation and employee benefits of the Continuing Employees. Buyer shall be responsible as of the Closing Date for all liability, obligations and Claims arising after the Closing Date which arise from or relate to any employment agreements, retention agreements or collective bargaining agreements; any grievances, arbitrations or unfair labor practice charges; and any alleged violation of Law. Seller and Colfax shall be responsible for all liability, obligations and Claims arising prior to and including the Closing Date which arise from or relate to any employment agreements, retention agreements or collective bargaining agreements; any grievances, arbitrations or unfair labor practice charges; or any alleged violations of Law.

(b) Service Credit. For purposes of any employee benefit plan, program or arrangement established for or made available to Continuing Employees by Buyer (the “Buyer Plans”), Buyer shall credit such Continuing Employees with service for all periods of service prior to the Closing Date with the Acquired Companies or any Subsidiary to the extent that such service was credited under the equivalent Seller benefit plans. Such service will be credited for purposes of determining eligibility for, vesting in, and the amount of benefits under all of the Buyer Plans and for all other purposes for which service is either taken into account or recognized; provided, however, such service need not be credited to the extent that it would result in duplication of coverage or benefits.

(c) Welfare Plans. Buyer Plans which are welfare benefit plans within the meaning of Section 3(1) of ERISA (“Buyer’s Welfare Plans”) shall provide coverage and benefits to Continuing Employees of the Acquired Companies and Subsidiaries (and the eligible dependents of the Continuing Employees) beginning on the Closing Date. Buyer shall, or shall cause the Acquired Companies and the Subsidiaries to, waive any pre-existing condition limitations and eligibility waiting periods for Continuing Employees under Buyer’s welfare plans (but only to the extent such pre-existing condition limitations and eligibility waiting periods were satisfied under the Seller benefit plans as of the Closing Date). Colfax benefit plans that are welfare benefits plans within the meaning of Section 3(1) of ERISA and that provide benefits to Continuing Employees (“Colfax Welfare Plans”) shall be liable for all claims incurred with respect to Continuing Employees and their spouses and dependents under the Colfax Welfare Plans if incurred on or prior to the Closing Date. The Continuing Employees shall be entitled to apply deductibles and out-of-pocket payments expended for covered medical and dental expenses under the Acquired Companies’ welfare plans, in the plan year in which the Closing Date occurs, to the deductible and out-of-pocket maximums under the Buyer’s Welfare Plans. After the Closing Date, Buyer, the Acquired Companies and the Subsidiaries shall be responsible for all claims incurred by Continuing Employees after the Closing Date. For purposes of this Section 5.04(c), a claim will be deemed “incurred” on the date that the event that gives rise to the claim occurs (for purposes of life insurance, sickness, accident and disability programs) or on the date that treatment or services are provided (for purposes of health care programs). The provisions of this Section 5.04(c) shall not apply in respect of any severance or termination plans, policies or arrangements.

(d) Pension Plan Transfer.

(i) Effective as of the Closing Date, Buyer shall establish (or cause the Acquired Companies or one of its Subsidiaries, as applicable, to establish) a defined benefit pension plan and trust intended to be qualified under Section 401(a) of the Code and tax-exempt under Section 501(a) of the Code (“Buyer’s Pension Plan”) for the benefit of Continuing Employees, who have an accrued benefit under the Retirement Plan for Power Transmission Employees of Colfax Corporation (“Colfax Pension Plan”) at the Closing Date (the “Pension Participants”). Each Pension Participant participating in the Colfax Pension Plan at the Closing Date shall become a participant in Buyer’s Pension Plan as of the Closing Date.

(ii) On the Closing Date, or as soon as practicable thereafter, following the establishment of Buyer’s Pension Plan, but in no event later than 45 days following the establishment of such plan, Colfax shall cause to be filed all required Forms 5310-A

and any other required IRS or PBGC forms with the appropriate governmental agency in order for Buyer’s Pension Plan to receive a transfer of assets and liabilities from the Colfax Pension Plan on or following the Closing Date in accordance with the spinoff provisions set forth in Code Section 414(l) and in accordance with the provisions described below in this Section 5.04(d).

(iii) Effective as of the Closing Date, in accordance with the provisions of this Section 5.04(d), Colfax shall cause the Colfax Pension Plan and related trust to transfer to Buyer’s Pension Plan and related trust, and Buyer shall cause Buyer’s Pension Plan and related trust to accept from the Colfax Pension Plan and related trust, a transfer of all liabilities for benefits accrued under the Colfax Pension Plan by the Pension Participants, calculated as of the Closing Date in the manner described below; provided, however, that the acceptance of such liabilities shall be expressly conditioned on the completion of the asset transfer described below in this Section 5.04(d).

(iv) As soon as practicable following the establishment of Buyer’s Pension Plan and satisfaction of any applicable regulatory filing requirements and the requirements set forth in this Section 5.04(d), but not later than 180 days following satisfaction of such requirements unless the parties otherwise agree in writing (the “Final Transfer Date”), Colfax shall cause a transfer of the assets in respect of the transferred liabilities from the trust(s) established pursuant to Colfax Pension Plan to the trust(s) established pursuant to Buyer’s Pension Plan, and Buyer shall cause the trust(s) established pursuant to Buyer’s Pension Plan to accept such transfer of assets, in a total amount determined in accordance with Code Section 414(l) and this Section 5.04(d). In no event shall the total amount so transferred be less than the amount that is necessary to satisfy the requirements of Section 414(l) of the Code. Such transfer of assets shall be in cash, unless the parties agree otherwise in writing. Unless Colfax and Buyer agree otherwise in writing, all transfers shall occur on the last business day of a month. Colfax’s Actuary (as defined below) shall be responsible for the required actuarial certification under Section 414(l) of the Code.

(v) Colfax shall cause the enrolled actuary for the Colfax Pension Plan (“Colfax’s Actuary”) to calculate the transferred liabilities and the amount of assets to be transferred in respect of such transferred liabilities as if the Colfax Pension Plan were terminated on the Closing Date using the “safe harbor” assumptions (as in effect on the Closing Date) that would be used by the PBGC to calculate such benefits upon the termination of such plan (the “Transferred Benefit Liability”). The calculation of the transfer Benefit Liability and the amount of assets to be transferred with respect of such liability will be in accordance with Section 414(l) of the Code, Section 4044 of ERISA and on the basis of the cost method and the actuarial assumptions and procedures set forth on Schedule 5.04(d)(v) and the benefits accrued by the Pension Participants under the Colfax Pension Plan as of the Closing Date, in accordance with the requirements of Section 414(l) of the Code. The amount of the assets to be transferred from the Colfax Pension Plan to Buyer’s Pension Plan in respect of such Transferred Benefit Liabilities, as calculated pursuant to this Section 5.04(d), shall be referred to as the “Transfer Amount.”

(vi) Colfax shall be responsible for the payment of all fees and expenses incurred by Colfax, Colfax’s Actuary or the Colfax Pension Plan in the calculation and transfer of the Transfer Amount. The actuarial calculation of the Transferred Benefit Liability

and Transfer Amount determined by Colfax’s Actuary shall be subject to review and challenge by an actuarial firm designated by Buyer. In the event of a good faith dispute between those two actuaries as to the amount to be transferred under this Section 5.04(d), Colfax and Buyer shall select and appoint a mutually satisfactory third-party independent actuary. Such third-party actuary’s decision shall be conclusive as to any dispute for which the third-party actuary was appointed. The cost of such third-party actuary shall be divided equally between Colfax and Buyer.

(vii) A preliminary transfer of assets shall be made as soon as practicable following the Closing Date, but in no event later than thirty (30) days following the Closing Date, or, if later, 45 days following the filing of IRS Form 5310-A by Colfax’s Pension Plan (“Initial Transfer Date”). Within the time periods set forth in the immediately preceding sentence, Colfax shall cause to be transferred from the trust for the Colfax Pension Plan to the trust established for Buyer’s Pension Plan, an amount equal to the sum of 85% of the amount reasonably estimated by Colfax’s Actuary in good faith to be equal to the Transfer Amount, plus interest at the Interest Rate defined below from and including the Closing Date through but excluding the date of the initial transfer (the “Initial Transfer Amount”). As soon as administratively practicable after the date of the final determination of the Transfer Amount (the “True-Up Date”), and no later than the Final Transfer Date and if the True-Up Amount is positive, Colfax shall cause a second transfer to be made from the trust for the Colfax Pension Plan to the trust for Buyer’s Pension Plan of the “True-Up Amount.” The True-Up Amount shall be an amount equal to the Transfer Amount minus the sum of (i) the Initial Transfer Amount and (ii) the amount of any distributions made to any Pension Participant by the Colfax Pension Plan during the period after the Closing Date and prior to the Final Transfer Date, plus interest on the True-Up Amount at a rate equal to the composite rate of return earned by the Power Transmission plan from the last day of the month in which the Closing Date occurred (if the Closing date was on the 2nd or later of the month), to the last day of the month preceding the True Up Date (the “Interest Rate”) or, in the case of distributions, from and including the Closing Date through the date such distribution is made or such expense is paid.

(viii) If the True-Up Amount is not a positive amount, then on the True-Up Date or as soon as administratively practicable thereafter, Buyer shall cause Buyer’s Pension Plan trust to transfer to the Colfax Pension Plan trust an amount equal to the amount by which the Initial Transfer Amount exceeds the Transfer Amount, plus interest thereon from and including the Initial Transfer Date through but excluding the True-Up Date (or, if later, the date on which such amount is transferred to the Colfax Pension Plan) at the Interest Rate, plus an amount equal to distributions, if any, from the Colfax Pension Plan to the Pension Participants from the Closing Date through the Final Transfer Date, adjusted for interest at the Interest Rate, consistent with the approach set forth in Section 5.04(d)(vii) above.

(e) Savings Plans Transfer.

(i) Effective as of the Closing Date, Colfax will cause all Continuing Employees who are participants in their respective savings plans to become fully vested in their account balances under their respective savings plans (the “Colfax Savings Plans”). Effective as of the Closing Date, Buyer shall establish (or cause the Acquired Companies or one of the Subsidiaries, as applicable, to establish) a defined contribution pension plan intended to be

qualified under Section 401(a) of the Code (“Buyer’s Savings Plan”) for the benefit of the Continuing Employees who have account balances under the Colfax Savings Plans (the “Savings Participants”).

(ii) As soon as practicable following the establishment of Buyer’s Savings Plan and satisfaction of any applicable regulatory filing requirements and the requirements set forth in this Section 5.04(e), but not later than 180 days following satisfaction of such requirements unless the parties otherwise agree in writing, Colfax shall cause a transfer of the plan accounts, valued as of the date of transfer, of the Savings Participants, from the Colfax Savings Plans and related trusts to Buyer’s Savings Plan and related trust, and Buyer shall cause Buyer’s Savings Plan and related trust to accept such transfer of assets (the date on which such transfer occurs is referred to as the “Savings Transfer Date”), including outstanding loan notes. Such transfer of assets shall be in cash (and loan notes), unless the parties agree otherwise in writing. Unless Colfax and Buyer agree otherwise in writing, all transfers shall occur on the last business day of a month.

(iii) From and after the Closing Date until the Savings Transfer Date, any benefit payable to a Savings Participant shall be paid and continue to be paid out of the Colfax Savings Plans’ trusts (it also being understood that Colfax shall continue to administer such accounts through the Savings Transfer Date, including participant investment directions). On and after the Savings Transfer Date, any such benefits payable to a Savings Participant shall be paid from Buyer’s Savings Plan trust. Colfax shall cause the Colfax Savings Plans to be amended to the extent required to provide that no distribution of any account balances under the Colfax Savings Plans shall be made to any Savings Participant on account of the actions contemplated by this Agreement and this Section 5.04(e), or on account of the Acquired Companies and the Subsidiaries ceasing to be affiliates of Colfax as of the Closing Date. Colfax and Buyer shall work together to develop a process whereby Savings Participants who have loans outstanding under the Colfax Savings Plans as of the Closing Date will be permitted to continue to make periodic repayments on such outstanding loans through reduction of salary paid by Buyer or the Acquired Companies or the Subsidiaries, and Buyer or the Acquired Companies or the Subsidiaries remitting such payments to the Colfax Savings Plans on a timely basis.

(f) Retiree Welfare Benefits. Effective as of the Closing Date, Buyer shall assume (or cause the Acquired Companies and the Subsidiaries, if applicable, to continue to honor), to the extent not otherwise required by or resulting from operation of Law or collective bargaining agreements, all post-employment and post-retirement welfare benefit obligations with respect to all Continuing Employees. Buyer shall establish a post-retirement welfare benefit plan (“Buyer’s PRB Plan”) for the benefit of the Continuing Employees that provides benefits that are substantially comparable to the benefits provided under the Company Benefit Plans which provide post-retirement welfare plan. Benefits under Buyer’s PRB Plan, in the case of a Union Employee, shall continue at least until the expiration of the applicable collective bargaining agreement).

(g) Flexible Benefits. As soon as practicable after the Closing Date, Colfax shall transfer the remaining account balances for each of the Continuing Employees in the Colfax Flexible Spending Account Plan (“Colfax FSA Plan”) (which shall consist of the amount the Continuing Employees have contributed to date minus the total amount of any claims paid,

and such transfer shall include any liabilities to the Continuing Employees) to the Buyer’s FSA plan. To the extent that the total amount of claims paid by Colfax as of the transfer date exceeds the total amount the Continuing Employees have contributed to the Colfax FSA Plan as of the transfer date, Buyer shall promptly pay to Colfax this amount. Colfax shall provide administrative assistance as is reasonably necessary in transferring the account balances under the Colfax FSA to Buyer.

(h) 2004 Bonus Plans. Buyer shall assume the obligation under the bonus arrangements applicable to the CPTG, the terms of which are described on Schedule 5.04(h). In the event that Buyer terminates a Continuing Employee prior to the Continuing Employee receiving his 2004 Bonus, Buyer agrees that it will pay a pay that portion of the 2004 Bonus to the terminated Continuing Employee equal to the quotient obtained by dividing the Continuing Employee’s 2004 Bonus amount by the number of months during 2004 that the Continuing Employee was employed by CPTG and Buyer.

(i) Cooperation.

(i) Colfax agrees to furnish Buyer with such information concerning employees, employee payroll and employee benefit plans, subject to confidentiality and privacy considerations, and to take all such other action as is necessary and appropriate to effect the transactions contemplated hereby.

(ii) Colfax and Buyer shall reasonably cooperate in connection with any required notification to, or any required consultation with, or the provision of documents and information to, the employees, employee representatives, work councils, unions, labor boards and relevant government agencies and governmental officials concerning the transactions contemplated by this Agreement with respect to Continuing Employees of any of the Acquired Companies and the Subsidiaries not employed in the United States so that such persons may render advice as required in accordance with Law.

Subject to the terms and conditions provided herein, Colfax, Seller and Buyer shall (a) use their reasonable best efforts to cooperate with each other in (i) determining which filings are required to be made prior to the Closing Date, and which consents are required to be obtained in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and (ii) timely making all such filings and timely seeking all such consents; and (b) use their reasonable best efforts to cause the conditions to each of Seller’s and Buyer’s obligations hereunder to be fulfilled, including, but not limited to, those filings which may be required pursuant to Section 5.09 hereof.

Except as required by applicable Law, no publicity, release or announcement concerning the transactions contemplated hereby shall be issued by either party without the advance written consent of such other party, which consent shall not be unreasonably withheld. In the event that a party is required by applicable Law to make a release or announcement,

such party shall provide the other party with a reasonable opportunity to review such release or announcement before such release or announcement is made.

With respect to the financial books and records of the Acquired Companies and the Subsidiaries (other than Tax records which are provided for in Section 5.08 and minute books of Acquired Companies and the Subsidiaries relating to matters on or prior to the Closing Date), for a period of ten years after the Closing Date, neither Seller nor Buyer shall cause or permit their destruction or disposal without first offering to surrender them to Buyer or Seller as appropriate, and Seller and Buyer shall allow Buyer and Seller and their representatives, as appropriate, access to such books and records during regular business hours.

(a) Buyer shall retain and shall cause the Acquired Companies and Subsidiaries to retain, and Seller and Colfax shall retain, and each such party shall make available or shall cause to be made available to the other party, until the applicable statute of limitations (including any extensions) have expired, copies of all Tax Returns, supporting work schedules, and other records or information that may be relevant to such returns for all Tax periods or portions thereof ending before or including the Closing, shall make available at a mutually convenient time such knowledgeable employees and facilities as are needed to provide explanation of any such documents or information and shall not destroy or otherwise dispose of any such records without first providing the other party with a reasonable opportunity to review and copy same at the cost of such other party.

(b) Seller shall prepare and file all Tax Returns with respect to the Acquired Companies and the Subsidiaries for all periods commencing prior to and ending on or before the Closing Date (the “Pre-Closing Tax Period”). Seller or Colfax shall cause an election under Section 754 of the Code (and similar elections under all similar provision of Law) to be in effect for the Tax period ending on the Closing Date with respect to each Acquired Company or Subsidiary treated as a partnership for federal income tax purposes (or other income tax Law) for which the tax period will end under the provisions of Section 708(b)(1)(B) of the Code (or similar provisions of Law) as a result of the transactions contemplated by this Agreement. Buyer shall prepare and file all Tax Returns with respect to the Acquired Companies and the Subsidiaries for all periods commencing after the Closing Date and ending thereafter (the “Post-Closing Tax Period”). Buyer shall prepare or cause to be prepared and file or cause to be filed any Tax Returns with respect to the Acquired Companies and the Subsidiaries for Tax periods which begin before the Closing Date and end after the Closing Date, if any (the “Straddle Period”). Buyer shall forward the Straddle Period Tax Returns and supporting calculations to Seller, for Seller’s review, no later than sixty (60) days prior to the filing of the Tax Returns. In preparation of the Straddle Period Tax Returns, Buyer shall use accounting methods and elections consistent with those used previously by Seller, unless Buyer obtains the prior written consent of Seller or Colfax (which consent shall not be unreasonably withheld) to do otherwise; provided, however, that Buyer may make elections under Section 754 of the Code (or any similar election under any similar provision of Law). Upon demand by Buyer, Seller and Colfax shall within five business days pay to Buyer the portion of Straddle Period Taxes (to

the extent such Taxes exceed prepayments made with respect to such Taxes prior to the Closing Date) allocated to Seller pursuant to Section 5.08(g).

(c) Seller and Buyer shall, unless prohibited by applicable Law, close the taxable period of the Acquired Companies and the Subsidiaries as of the close of business on the Closing Date. If applicable Law does not permit the Acquired Companies or the Subsidiaries to close its taxable year on the Closing Date or in the case of Taxes payable with respect to any Straddle Period, the amount of such Taxes allocable to the portion of such Straddle Period ending on the Closing Date shall (i) in the case of any Taxes based upon or related to income or gross receipts, be deemed equal to the amount which would be payable if the relevant taxable period ended on the Closing Date, and (ii) in the case of any Taxes other than Taxes based upon or related to income or gross receipts, be deemed to be the amount of such Taxes for the entire Straddle Period multiplied by a fraction the numerator of which is the number of days in the portion of the Straddle Period ending on the Closing Date and the denominator of which is the number of days in the entire Straddle Period. Any allocation of income or deductions required to determine any Taxes relating to a Straddle Period shall be taken into account as though the relevant taxable period ended on the Closing Date and by means of a closing of the books and records of the Company as of the close of the Closing Date; provided that exemptions, allowances or deductions that are calculated on an annual basis (including, but not limited to, depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period after the Closing Date in proportion to the number of days in each such period.

(d) Seller and Colfax and Buyer shall provide to each other prompt notice of, and as requested by the other party reasonable cooperation (including, without limitation, make available at a mutually convenient time knowledgeable employees, documents, information and facilities) in respect of, any audit or similar investigation or proceeding in which the Internal Revenue Service or any other Governmental Authority makes or proposes to make a Tax adjustment to any Tax period of the Acquired Companies or the Subsidiaries.

(e) Seller shall have the right, at its own expense, to control any audit or examination by any Taxing authority, initiate any claim for refund, contest, resolve and defend against any assessment, notice of deficiency, or other adjustment (a “Tax Matter”) as it relates to the Acquired Companies for all Pre-Closing Tax Periods or the portion of any Straddle Period through the Closing Date; provided, however, that Seller shall not settle, compromise or abandon any such Tax Matter without the consent of Buyer, which consent shall not be unreasonably withheld, if such settlement compromise or abandonment would adversely affect Buyer. Buyer shall have the right, at its own expense, to control any Tax Matter as it relates to the Acquired Companies or Subsidiaries for the portion of any Straddle Periods after the Closing Date and all Post-Closing Tax Periods; provided, however, that with respect to Straddle Periods, Buyer shall not settle, compromise or abandon any Tax Matter without the consent of Seller or Colfax, which consent shall not be unreasonably withheld, if such settlement compromise or abandonment would adversely affect Seller.

(f) Buyer shall not make, or cause to be made, an election under Section 338(h)(10) of the Code or similar election pursuant to any Law concerning the transactions contemplated under this Agreement.

(g) Except as otherwise provided in this Article V, Seller and Colfax, jointly and severally, hereby agree from and after the Closing Date to pay, and to indemnify, defend and hold harmless Buyer Indemnified Parties from and against all Losses relating to, or arising out of, (i) all Taxes attributable to (including by virtue of Treasury Regulations § 1.1502-6 and any similar provision of state, local, or foreign tax laws) the Acquired Companies and the Subsidiaries for Pre-Closing Periods and any portion of a Straddle Period through the Closing Date and (ii) the breach of any representation or warranty contained in Section 3.10 (determined without regard to any qualification related to materiality contained therein). Colfax shall be entitled to any reduction in or refund of Taxes, net of any Taxes with respect thereto, for Pre-Closing Periods and for the portion of any Straddle Period through the Closing Date. Except as otherwise provided in this Article V, Buyer shall pay (or cause to be paid), and shall indemnify and hold harmless Colfax and its Affiliates and subsidiaries (excluding the Acquired Companies and Subsidiaries) from and against, (i) all Taxes attributable to any Acquired Company and Subsidiaries for Post-Closing Periods and any portion of a Straddle Period after the Closing Date and (ii) for any increase in Taxes attributable to any Acquired Company and Subsidiaries for Pre-Closing Periods and any portion of a Straddle Period through the Closing Date, to the extent such increase is caused directly by any action taken on the Closing Date by Buyer or the Acquired Companies after the Closing outside the ordinary course of business without Colfax’s written consent. Buyer shall be entitled to any reduction in or refund of such Taxes. The indemnification provided for in this Section 5.08(g) shall be the sole remedy for any claim in respect of Taxes, including any claim arising out of or relating to a breach of any representation or warranty contained in Section 3.10 hereof, and in the event of a conflict between the provisions of this Section 5.08(g), on the one hand, and the provisions of Article IX hereof, on the other, the provisions of this Section 5.08(g) shall control. To the extent that a party indemnified pursuant to this provision actually recognizes Tax Benefits as a result of any indemnifiable Losses, the indemnified party shall pay the amount of such Tax Benefits (but not in excess of the indemnification payments or payments actually received from the indemnifying party with respect to such Losses) to the indemnifying party as such Tax Benefits are actually recognized by the indemnified party.

(h) Any Tax allocation, indemnity, or similar agreement or arrangement between Seller and its Affiliates, on the one hand, and the Acquired Companies or the Subsidiaries, on the other hand, shall be terminated prior to the Closing Date and shall have no further effect for any taxable year (whether the current year, a future year or a past year).

(i) Seller, Colfax and Buyer agree to treat any indemnity payment made pursuant to Section 5.08(g) or Article IX as an adjustment to the Purchase Price for federal, state, local and foreign income Tax purposes.

As promptly as practicable and no later than fifteen (15) business days following the execution of this Agreement, Seller and Buyer shall complete any filings that may be required pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (“HSR Act”) or shall mutually agree that no such filing is required. To the extent that the parties determine that any foreign antitrust filings are required, Seller and Buyer shall cooperate to promptly complete such filings, and such filings will be made within twenty (20) business days following execution of this Agreement. Seller and Buyer shall diligently take, or

fully cooperate in the taking of, all necessary and proper steps, and provide any additional information reasonably requested in order to comply with, the requirements of such Act and foreign Laws. Buyer and Colfax shall promptly disclose to each other the substance of any contacts either party has with antitrust authorities. Any filing fees payable pursuant to this Section 5.09 shall be borne equally by Seller and Buyer.

(a) From the Closing Date until the third anniversary of the Closing Date, neither Colfax nor Seller shall own, manage, operate, control or participate in the ownership, management, operation or control of any business, whether in corporate, proprietorship or partnership form or otherwise, that competes with the mechanical power transmission business of CPTG which is comprised of the manufacture and sale of couplings, gearboxes, clutches and brakes and their related parts, anywhere in the world (a “Restricted Business”); provided, however, that the restrictions contained in this Section 5.10(a) shall not restrict (i) the acquisition by Colfax or its Affiliates, directly or indirectly, of less than 5% of the outstanding capital stock of any publicly traded company engaged in a Restricted Business, (ii) the purchase or other acquisition by Colfax or its Affiliates after the Closing Date of a business with product lines that taken alone would constitute a Restricted Business (“Competing Products”), if in the year prior to such acquisition, the Competing Products were (A) non-core business line products of such business and (B) the net sales generated by the Competing Products were less than 5% of the net sales of CPTG, or (iii) the acquisition of any business if the Restricted Business products are for internal consumption and spare parts sales in connection with a non-Restricted Business. Notwithstanding the foregoing, Colfax or its Affiliates may acquire a business with Competing Products that exceed the thresholds set forth in provision (ii)(B) above, provided that in such case Colfax or its Affiliate making such acquisition, shall provide Buyer with prompt notice of such acquisition after the closing date of such acquisition and shall, for a period of thirty (30) days after notice to Buyer, give Buyer the opportunity to negotiate in good faith exclusively with Colfax, to buy the Competing Products on commercially reasonable terms and Price. In the event that Buyer elects not to acquire the Restricted Business, Colfax, or its Affiliates, as applicable, shall divest the Competing Products within one (1) year following the termination of the thirty (30) day negotiation period. The parties hereto specifically acknowledge and agree that the remedy at law for any breach of the foregoing will be inadequate and that Buyer, in addition to any other relief available to it, shall be entitled to temporary and permanent injunctive relief without the necessity of proving actual damage or posting any bond.

(b) From the Closing Date until the third anniversary of the Closing Date, neither Colfax nor Seller shall, directly or indirectly: (i) cause, solicit, induce or encourage any employees of Seller or Colfax who are or become employees of Buyer or its Affiliates to leave such employment; or (ii) cause, induce or encourage any material actual or prospective client, customer, supplier, or licensor of the Business (including any existing or former customer of Seller or Colfax and any Person that becomes a client or customer of the Business after the Closing known to Seller and Colfax as such) or any other Person who has a material business relationship with the Business, to terminate or modify any such actual or prospective relationship.

(c) From the Closing Date until the third anniversary of the Closing Date, neither Buyer nor any of its Affiliates shall, directly or indirectly: (i) cause, solicit, induce or encourage any employees of Seller or Colfax to leave such employment; or (ii) cause, induce or encourage any material actual or prospective client, customer, supplier, or licensor of Seller or Colfax (including any existing or former customer of Seller or Colfax and any Person that becomes a client or customer of Seller or Colfax after the Closing known to Buyer or its Affiliates as such) or any other Person who has a material business relationship with the Colfax or the Seller, to terminate or modify any such actual or prospective relationship.

(d) After the Closing Date, neither Colfax nor Seller nor any of their executive officers or directors shall, directly or indirectly, disclose, reveal, divulge or communicate to any Person other than authorized officers, directors and employees of Buyer or use or otherwise exploit for its own benefit or for the benefit of anyone other than Buyer, any Confidential Information (as defined below). Seller, Colfax and each of their executive officers and directors shall not have any obligation to keep confidential any Confidential Information if and to the extent disclosure thereof is specifically required by Law; provided, however, that in the event disclosure is required by applicable Law, such Person shall provide Buyer with prompt notice of such requirement prior to making any disclosure so that Buyer may seek an appropriate protective order. For purposes of this Section 5.10(c), “Confidential Information” shall mean any confidential information with respect to the Business, including, methods of operation, customers, customer lists, products, prices, fees, costs, technology, inventions, trade secrets, know-how, software, marketing methods, plans, personnel, suppliers, competitors, markets or other specialized information or proprietary matters and the terms, including purchase price and parties, of this Agreement and the transactions contemplated hereby. “Confidential Information” does not include, and there shall be no obligation hereunder with respect to, information that (i) is generally available to the public on the date of this Agreement, (ii) is used by Colfax or Seller in connection with its other business operations or (iii) becomes generally available to the public other than as a result of a prohibited disclosure hereunder.

(e) The covenants and undertakings contained in this Section 5.10 relate to matters which are of a special, unique and extraordinary character and a violation of any of the terms of this Section 5.10 will cause irreparable injury to the parties, the amount of which will be impossible to estimate or determine and which cannot be adequately compensated. Therefore, the parties hereto will be entitled to an injunction, restraining order or other equitable relief from any court of competent jurisdiction in the event of any breach of this Section 5.10. The rights and remedies provided by this Section 5.10 are cumulative and in addition to any other rights and remedies which the parties hereto may have hereunder or at Law or in equity. In the event that the Buyer were to seek damages for breach of this Section 5.10, the portion of the consideration delivered to Colfax hereunder which is attributed by the parties to the foregoing covenants shall not be considered a measure or limit on such damages.

(f) The parties hereto agree that, if any court of competent jurisdiction in a final nonappealable judgment determines that a specified time period, a specified geographical area, a specified business limitation or any other relevant feature of this Section 5.10 is unreasonable, arbitrary or against public policy, then such a lesser time period, geographical area, business limitation or other relevant feature which is determined to be reasonable, not arbitrary and not against public policy may be enforced against the applicable party.

Seller shall cause the Acquired Companies to maintain in full force and effect all of their existing casualty, liability, and other insurance through the day following the Closing Date in amounts not less than those in effect on the date hereof.

Seller shall, and Buyer shall cooperate with Seller to, obtain at the earliest practicable date all consents and approvals required to consummate the transactions contemplated by this Agreement.

Each of Seller and Buyer shall use its commercially reasonable efforts to (a) take all actions necessary or appropriate to consummate the transactions contemplated by this Agreement and (b) cause the fulfillment at the earliest practicable date of all of the conditions to their respective obligations to consummate the transactions contemplated by this Agreement.

From time to time prior to the Closing, Seller and Colfax will supplement or amend the Schedule(s) hereto with respect to any matter hereafter arising which, if existing or occurring at or prior to the date of this Agreement, would have been required to be set forth or described in any such Schedule or which is necessary to complete or correct any information in any such Schedule or in any representation or warranty of Seller or Colfax which has been rendered inaccurate thereby. If the Closing occurs, then Buyer shall be deemed to have waived any rights or claim pursuant to the terms of this Agreement or otherwise with respect to those matters arising after the date hereof and disclosed in any supplemental or amended Schedule(s).

In order to assist with obtaining the loans contemplated by the Financing Commitment, Seller shall use its reasonable commercial efforts, and shall use its reasonable commercial efforts to cause each Acquired Company and Subsidiary to provide such commercially reasonable assistance and cooperation as Buyer and its Affiliates may reasonably request, including, but not limited to, cooperation in the preparation of any offering memorandum or similar document, authorizing and requesting Seller’s accountants to consent to the inclusion of their auditor reports in such offering memorandum or similar document, cooperating with initial purchasers or placements agents, making senior management of Seller and the Acquired Companies reasonably available for customary “roadshow” presentations and cooperation with prospective lenders in performing their due diligence, and entering into customary agreements with underwriters, initial purchasers or placement agents, all of which

out-of-pocket expenses incurred by Seller, directly or indirectly, in providing such cooperation shall be fully reimbursed to Seller by Buyer.

Seller and Buyer shall each be responsible for 50% of any sales or use Taxes applicable to the LLC Interests or resulting from the transactions contemplated by this Agreement and all other applicable stamp, documentary, filing, recording, transfer or similar fees or Taxes or governmental charges in connection with the transactions contemplated by this Agreement. Seller and Buyer shall cooperate to file all necessary documents (including all Tax Returns) with respect to all such amounts in a timely manner.

To the extent that the Colfax name, IMO name, and “swoosh” trademark set forth on Schedule 5.17 are used by CPTG on stationary, signage, invoices, receipts, forms, packaging, advertising and promotional materials, product training and service literature and materials, computer programs or like materials or appear in inventory at the Closing Date, Buyer may use such materials or sell such inventory after the Closing Date for a period of one year without altering or modifying such materials or inventory, or removing the Colfax name; provided, however, that Buyer may not produce any new materials containing the Colfax or IMO name. At Closing, Colfax shall enter into a royalty-free, one-year license with Buyer and its Subsidiaries for use of the “swoosh” mark.

Colfax, Seller and Buyer shall enter into a Transition Services Agreement, on terms reasonably acceptable to each of the parties (the “TSA”). The TSA shall provide for the provision of services by Colfax or Seller, as applicable, reasonably necessary for Buyer to operate the Business in the Ordinary Course of Business for the periods set forth in the TSA.

The obligations of Buyer to purchase the LLC Interests and to proceed with the Closing are subject to the satisfaction (or waiver by Buyer) at or prior to the Closing of each of the following conditions:

The representations and warranties of Seller and Colfax made herein or in any agreement, instrument or document called for hereunder, qualified as to materiality, shall be true and correct as so qualified, and those not so qualified shall be true and correct in all material respects, when made and on the Closing Date as though such representations and

warranties were made on and as of the Closing Date (except for those representations and warranties that are made by their terms as of an earlier date, which shall be true and correct on and as of such date), and each of Seller and Colfax shall have performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by Seller or Colfax prior to the Closing Date.

Seller shall have delivered to Buyer all agreements, instruments and documents required to be delivered by Seller to Buyer pursuant to Section 8.02.

No action or proceeding by or before any Governmental Authority or by any other Person shall have been instituted or threatened (and not subsequently dismissed, settled or otherwise terminated) which might restrain, prohibit or invalidate the transactions contemplated by this Agreement or which seeks to obtain substantial damages (but not including an action or proceeding instituted or threatened by Buyer).

Seller shall have made all filings with and notifications of Governmental Authorities, regulatory agencies and other entities required to be made by the Acquired Companies and Subsidiaries in connection with the execution and delivery of this Agreement, the performance of the transactions contemplated hereby and the continued operation of the business of the Acquired Companies and Subsidiaries by Buyer subsequent to the Closing; and Buyer shall have received all authorizations, waivers, consents and permits from all third parties, including, without limitation, applicable Governmental Authorities, regulatory agencies, lessors, lenders and contract parties, in forms satisfactory to Buyer, required to permit the continuation of the business of the Acquired Companies and Subsidiaries and the consummation of the transactions contemplated by this Agreement in accordance with the Financing Commitment.

(a) Buyer shall have received the funds contemplated by the Financing Commitment;

(b) there shall not have been or occurred any Material Adverse Effect; and

(c) Seller shall have caused to be terminated any and all security interests or other similar rights any third party may have in or to the assets or stock of any of the Acquired Companies or Subsidiaries.

The obligation of Seller to sell, transfer, convey and deliver the LLC Interests, and to proceed with the Closing are subject to the satisfaction (or waiver by Seller) at or prior to the Closing of each of the following conditions:

The representations and warranties of Buyer made in this Agreement or in any agreement, instrument or document called for hereunder shall have been true and correct in all material respects when made and shall be true and correct in all material respects on the Closing Date as though such representations and warranties were made on and as of the Closing Date (except for those representations and warranties that are made by their terms as of an earlier date, which shall be true on and as of such date), and Buyer shall have performed and complied in all material respects with all covenants and agreements required to be performed or complied with by Buyer prior to the Closing Date.

Buyer shall have delivered to Seller the Purchase Price and all agreements, instruments and documents required to be delivered by Buyer to Seller pursuant to Section 8.03.

No action or proceeding by or before any Governmental Authority or by any other Person shall have been instituted or threatened (and not subsequently dismissed, settled, or otherwise terminated) that might restrain, prohibit or invalidate the transactions contemplated by this Agreement or which seeks to obtain substantial damages, other than an action or proceeding instituted or threatened by Seller.

Seller shall have received copies of all authorizations, waivers, consents and permits from all third parties, including, without limitation, applicable Governmental Authorities, regulatory agencies, lessors, lenders and contract parties, required to permit the consummation of the transactions contemplated by this Agreement in accordance with the Financing Commitment.

Unless otherwise agreed by the parties hereto, the Closing shall be held at 10:00 A.M. local time within 3 Business Days after all the conditions set forth in Articles VI and VII have been satisfied or waived in writing at the offices of Hogan & Hartson L.L.P., 111 S. Calvert Street, Suite 1600, Baltimore, Maryland or at such other time and place as the parties may agree.

At or before the Closing, Seller shall have delivered to Buyer the following agreements and instruments, dated as of the Closing Date:

(a) Certificates representing the LLC Interests in proper form for transfer;

(b) Articles of organization or similar organizational documents, corporate records and minute books of each Acquired Company and each Subsidiary, certified as of the most recent date practicable by the Secretary of State or other appropriate authority of the jurisdiction in which each such entity is domiciled;

(c) Certificates of good standing for each Acquired Company as of the most recent date practicable certified by the Secretary of State or other appropriate authority in each state where an Acquired Company is qualified to do business;

(d) A Certificate signed by the Chief Executive Officer and Chief Financial Officer of Seller, each in form and substance reasonably satisfactory to Buyer, dated as of the Closing Date, as to the satisfaction in all respects by Seller of the conditions set forth in Section 6.01;

(e) An affidavit of non-foreign status that complies with Section 1445 of the Code (a “FIRPTA Affidavit”);

(f) A duly executed assignment and assumption agreement and duly executed assignments of the U.S. trademark registrations and applications included in the Intellectual Property of the Acquired Companies and Subsidiaries, in a form suitable for recording in the U.S. trademark office, and general assignments of all other such Intellectual Property;

(g) A duly executed power of attorney;

(h) Copies of all consents, waivers and approvals required to be obtained by Seller pursuant to this Agreement;

(i) A Certificate of the Secretary of Seller certifying as to the resolutions authorizing this Agreement and the transactions contemplated hereby and the organizational documents of each Acquired Company and Subsidiary; and

(j) An Opinion of Hogan & Hartson L.L.P., in form and substance reasonably satisfactory to Buyer;

(k) License of Colfax Business System “business process” and one-year, royalty-free license of the “swoosh” mark, in form and substance reasonably satisfactory to Buyer;

(l) Transition Services Agreement, in form and substance reasonably satisfactory to Buyer;

(m) Such other documents as Buyer may reasonably request.

At or before the Closing, Buyer shall deliver to Seller the following agreements and instruments, dated as of the Closing Date:

(a) Certificate of the Secretary of Buyer certifying as to the resolutions authorizing this Agreement and the transactions contemplated hereby; and

(b) A Certificate, dated as of the Closing Date, as to the satisfaction by Buyer of the conditions set forth in Section 7.01.

(d) An assumption agreement assuming the Transition Agreements.

(e) such other instruments or documents as the Seller may reasonably request.

(a) All claims and causes of action with respect to all of the representations, warranties, covenants and agreements of Colfax and Seller contained in this Agreement shall survive until the date that is eighteen (18) months following the Closing Date, except that all claims and causes of action with respect to (i) (A) Sections 3.01 (Authorization), 3.02 (LLC Interests to be Transferred), 3.03 (Organization and Standing), and the confidentiality provisions set forth in Section 5.10 (Non-competition; Non-solicitation; Confidentiality) shall

have no expiration date and shall survive indefinitely, (B) Section 3.10 (Taxes), Section 3.15 (No Brokers) and Section 5.08 (Tax Matters) shall survive for the applicable statute of limitations (including extensions) plus a period of thirty (30) days and (C) Section 5.10 (Non-competition; Non-solicitation; Confidentiality) other than the confidentiality provisions, and Sections 9.02(a)(iv) and (v) shall survive until the date that is three (3) years following the Closing Date, and (ii) Retained Liability Claims shall survive indefinitely. All claims and causes of action with respect to all of the representations, warranties, covenants and agreements of Buyer contained in this Agreement shall survive until the date that is eighteen (18) months following the Closing Date, except that (i) all claims and causes of action with respect to Sections 4.01 (Organization and Good Standing), Section 4.02 (Authorization), 4.06 (No Brokers) and the confidentiality provisions set forth in Section 5.10 (Non-competition; Non-solicitation; Confidentiality) shall survive indefinitely and (ii) Section 5.10 (Non-competition; Non-solicitation; Confidentiality) other than the confidentiality provisions, shall survive until the date that is three (3) years following the Closing Date.

(b) In the event notice of any claim for indemnification for breach of a representation, warranty, covenant or agreement under Section 9.02 (Indemnification by Seller and Colfax) or Section 9.03 (Indemnification by Buyer) is given (within the meaning of Section 11.03 (Notices) within the applicable survival period, the cause of action that is the subject of such indemnification claim shall survive until such time as such claim is finally resolved.

(a) Seller and Colfax, jointly and severally, hereby agree from and after the Closing Date to indemnify, defend and hold harmless Buyer, its Affiliates, the Acquired Companies and Subsidiaries, and, if applicable, their respective directors, officers, shareholders, members and employees and their heirs, successors and assigns (the “Buyer Indemnified Parties” and, collectively with Colfax and Seller Indemnified Parties, the “Indemnified Parties”) from and against all demands, claims, complaints, actions or causes of action, suits, proceedings, investigations, arbitrations, assessments, losses, damages, liabilities, costs and expenses, including, but not limited to, interest, penalties and attorneys’ fees and disbursements (collectively, “Losses”), imposed on, sustained, incurred or suffered by or asserted against any of the Buyer Indemnified Parties, directly or indirectly, relating to or arising out of:

(i) subject to Section 9.02(b), the breach of any representation, warranty, covenant or agreement made by Colfax or Seller contained in this Agreement, other than the Non-Basket Representations, for the period during which claims and causes of action with respect thereto survive;

(ii) the breach of any representations or warranties in Section 3.01 (Authorization), Section 3.02 (LLC Interests to be Transferred), Section 3.03 (Organization and Standing), Section 3.10 (Taxes), and Section 3.15 (No Brokers), and the covenants set forth in Section 5.08 (Tax Matters) (collectively, the “Non-Basket Representations”);

(iii) the Retained Liability Claims;

(iv) subject to Sections 9.02(b) and 9.06, Known Environmental Conditions, or

(v) subject to Sections 9.02(b) and 9.06, Unknown Environmental Conditions.

(b) Except with respect to Retained Liability Claims, the Buyer may bring a claim seeking indemnification for any Losses under the terms and provisions of this Article IX only if such Loss exceeds $10,000 (an “Eligible Claim”) it being understood the substantially similar claims may be aggregated for purposes of establishing an Eligible Claim. Colfax and the Seller shall not be liable to the Buyer Indemnified Parties for any Eligible Claim with respect to the matters contained in Sections 9.02(a)(i) and 9.02(a)(v) (“Indemnities Subject to Basket”) except to the extent (and then only to the extent) the Losses therefrom exceed an aggregate amount equal to $500,000 (the “Indemnity Basket”) and then only for such Losses in excess thereof up to an aggregate amount equal to the greater of one-half of the Purchase Price or Ninety Million Dollars ($90,000,000) (the “Indemnity Cap”). Liability for Eligible Claims with respect to the matters contained in Section 9.02(a)(iv) shall be subject to the limitations set forth in Section 9.06.

(c) On the Closing Date, Buyer shall, on behalf of Seller, pay to Citibank, N.A. or any other escrow agent jointly selected by Colfax and Buyer, as agent to Buyer, Seller and Colfax (the “Indemnity Escrow Agent”), in immediately available funds out of the Purchase Price, to the account designated by the Indemnity Escrow Agent, an amount equal to Five Million Dollars ($5,000,000) (the “Indemnity Escrow Amount”), in accordance with the terms of this Agreement and the Indemnity Escrow Agreement, dated as of the date hereof, by and among Buyer, Seller, Colfax and the Indemnity Escrow Agent (the “Indemnity Escrow Agreement”). Any payment Seller or Colfax is obligated to make to any Buyer Indemnified Parties pursuant to this Article IX shall be paid first from the Indemnity Escrow Amount. On the date that is eighteen (18) months following the Closing Date, the Indemnity Escrow Agent shall release the Indemnity Escrow Amount (to the extent not used to pay Buyer for any indemnification claim) to Colfax, except that the Escrow Agent shall retain an amount equal to the amount of claims for indemnification under this Article IX asserted in writing prior to such date but not yet resolved (“Unresolved Claims”). The Indemnity Escrow Amount retained for Unresolved Claims shall be released by the Indemnity Escrow Agent (to the extent not used to pay Buyer for any such claims resolved in favor of Buyer) upon their resolution in accordance with this Article IX.

(a) Buyer hereby agrees from and after the Closing Date to indemnify, defend and hold harmless Seller and Colfax, their Affiliates and, if applicable, their respective directors, officers, shareholders and employees and their heirs, successors and assigns (the “Seller Indemnified Parties” from and against all Losses asserted against, imposed upon or incurred by Seller Indemnified Parties, directly or indirectly, relating to or arising out of:

(i) subject to Section 9.03(b), the breach of any representation, warranty, covenant or agreement made by Buyer contained in this Agreement, other than Buyer Non-Basket Representations, for the period during which claims and causes of action with respect thereto survive; and

(ii) the breach of any representations or warranties in Sections 4.01 (Organization and Good Standing), Section 4.02 (Authorization) and 4.06 (No Brokers) (collectively, the “Buyer Non-Basket Representations”).

(b) Except with respect to Buyer Non-Basket Representations, Seller may bring a claim seeking indemnification for any Losses under the terms and provisions of this Section 9.03 only if the aggregate amount of such Losses exceeds an aggregate amount equal to the Indemnity Basket and then Buyer shall be required to pay the entire amount of such Losses up to an aggregate amount equal to the Indemnity Cap.

The obligations and liabilities of the parties hereunder with respect to indemnity pursuant to this Article IX, resulting from any claim or other assertion of liability by third parties (hereinafter called collectively, “Claims”), shall be subject to the following terms and conditions:

(a) The indemnifying party shall have the right to undertake at its sole expense, by counsel of its own choosing, the defense of such Claim, except that Buyer shall control the conduct of any Remediation with respect to any Real Property unless (i)(A) Buyer alleges such Remediation is the responsibility of Seller or Colfax and (B) Seller or Colfax reasonably conclude that their conduct of such Remediation will facilitate recovery against a third party (other than Buyer, the Acquired Companies or Subsidiaries); or (ii) the parties mutually agree that Seller or Colfax shall conduct such Remediation.

(b) In the event that the indemnifying party shall elect not to undertake such defense, or within a reasonable time after notice of any such Claim from the other party shall fail to defend, the indemnified party (upon notice to the other party) shall have the right to undertake the defense, compromise or settlement of such Claim, by counsel or other representatives of its own choosing, on behalf of and for the account and risk of the other party.

(c) Anything in this Article IX to the contrary notwithstanding, (i) if there is a reasonable probability, in the indemnified party’s judgment, that a Claim may materially and adversely affect the indemnified party other than as a result of money damages or other money payments, the indemnified party shall have the right, at its own cost and expense, to participate in the defense, compromise or settlement of the Claim, (ii) the indemnifying party shall not, without the indemnified party’s written consent, settle or compromise any Claim or consent to entry of any judgment which does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the indemnified party of a release from all liability in respect of such Claim, and (iii) in the event that the indemnifying party undertakes defense of any Claim, the indemnified party, by counsel or other representative of its own choosing and at its sole cost and expense, shall have the right to consult with, and be provided reasonable

access to all relevant information within the possession of, the indemnifying party and its counsel or other representatives concerning such Claim and the indemnifying party.

(a) Except as provided in Section 5.08(i), the parties acknowledge and agree that their sole remedy after the Closing for any breach of any representation or warranty contained in this Agreement or any other matter arising hereunder or in connection with the transactions contemplated hereby shall be the indemnification provisions set forth in this Article IX. Notwithstanding the foregoing, nothing herein shall be construed or interpreted as limiting or impairing the rights or remedies the parties may have as set forth in Section 11.10 hereof.

(b) For purposes of calculating Losses under this Article IX with respect to breaches or noncompliance with the representations and warranties (but not the covenants and other Agreements contained herein), the Material Adverse Effect qualifications contained in the representations and warranties shall be ignored; provided, however, that any claim for breach of any such representation or warranty based on ignoring the Material Adverse Effect qualification shall be subject to the Eligible Claim, Indemnity Basket and Indemnity Cap limitations set forth in Section 9.02(b) above notwithstanding the designation of the representation or warranty as a Non-Basket Representation.

(a) In connection with any Remediation for which Buyer seeks indemnification under this Agreement, the parties agree that (i) Buyer shall allow Seller, Colfax or their agents access to the property for purposes of performing (as provided in Section 9.04(a)) or observing and monitoring (including collecting split samples) the Remediation, and Buyer shall cooperate with Seller’s reasonable requests, so long as Seller, Colfax or their agents do not unreasonably interfere with the Remediation or the operations of the business of Buyer and any monitoring and oversight shall be at Seller and Colfax’s sole cost and expense, (ii) the party performing the Remediation (“the Performing Party”) shall notify the other (“the Other Party”) in advance of the Remediation to be performed and keep the Other Party reasonably informed of the progress of any Remediation and the schedule for completing such Remediation; (iii) within 5 business days of receipt, the each party shall submit to the other party copies of all written communications, filings, reports, correspondence or other writings, photographs or materials submitted to or received from any person, entity or governmental agency in connection with any such Remediation, including, but not limited to, any draft of any writings received from any person performing Remediation on the Performing Party’s behalf; (iv) the Performing Party shall provide to the Other Party a reasonable opportunity to comment in advance upon any written communications, filings, reports, correspondence or other writings given to any governmental agency in connection with such corrective actions and will consider timely provided comments in good faith; (v) the Performing Party will perform the Remediation in accordance with applicable law; and (vi) to the extent possible, each party will provide the other party with a reasonable opportunity to participate in any meetings with any Governmental Authority regarding the Remediation, at such other party’s sole cost and expense.

(b) Notwithstanding any other provision of this Agreement, Seller and Colfax shall have no liability for Remediation pursuant to this Agreement except to the extent such Remediation (i) is required by Law or the lawful order of any Governmental Authority with jurisdiction over the Remediation; or (ii) is necessary to meet the published cleanup standards of any Governmental Authority with jurisdiction over the Remediation; provided, however, in the case of the CPTG facilities located in France, if there is no published cleanup standard, is necessary to meet any published Dutch cleanup standards, if typically applied to similar facilities in the relevant facilities’ jurisdiction.

(c) In conducting any Remediation hereunder, the Performing Party (i) shall use all commercially reasonable efforts to minimize costs in conducting the Remediation in accordance with applicable Environmental Laws; (ii) shall use cleanup standards based on industrial use of the Real Property; (iii) shall apply risk-based cleanup standards and employ deed restrictions and institutional and engineering controls where acceptable to the Governmental Authority overseeing the Remediation, if any, and, if applicable, to the landlord of the Real Property being remediated; (iv) shall employ cost-effective Remediation methods; and (v) if the Remediation results in a “no action” letter, liability protection, or other approval or protection of any Governmental Authority, take reasonable actions to include the Other Party as co-recipients of such protections and approvals.

(d) Colfax and Seller shall not be liable to the Buyer Indemnified Parties for Losses for Known Environmental Conditions except to the extent (and then only to the extent) that such Losses exceed an aggregate amount equal to One Million Dollars ($1,000,000) and then only for fifty percent of such Losses in excess thereof up to an aggregate amount equal to Ten Million Dollars ($10,000,000). In the event that Colfax and Seller incur Losses in excess of their share as described in this Section 9.06(d), Buyer shall promptly reimburse Colfax and Seller an amount equal to such excess. In the event that Seller and Colfax are able to recover more than fifty percent (50%) of any covered Loss pursuant to an indemnification or reimbursement from a third party, Seller and Colfax shall reimburse Buyer Indemnified Parties for those amounts recovered in excess of the allocated fifty percent (50%) for which Seller and Colfax are responsible hereunder, less the costs incurred by Seller and Colfax in pursuing such indemnification, up to the total cost recovered by Seller and Colfax from the third party.

(e) Notwithstanding any other provisions of this Agreement, (i) Buyer’s sole and exclusive remedy for Losses directly or indirectly relating to or arising out of Known Environmental Conditions shall be pursuant to Section 9.02(a)(iv) as limited by this Section 9.06; and (ii) Seller and Colfax shall have no liability or other obligation with respect to Unknown Environmental Conditions unless such Unknown Environmental Conditions are identified as a result of an investigation conducted pursuant to a lawful, enforceable order or other requirement of a Governmental Authority or a bona fide, third party claim. Buyer hereby agrees that absent a lawful, enforceable order or other requirement of a Governmental Authority, it will not conduct any investigation into Unknown Environmental Conditions until the date that is three (3) years after the Closing Date.

(f) Violations of Environmental Laws that do not involve or require Remediation, although subject to the provisions set forth in Section 9.06(d), are otherwise not subject to the procedures for Remediation set forth in this Section 9.06.

Buyer shall cooperate with any request of Seller or Colfax and make available, at Seller or Colfax’s sole cost and expense, all information (but excluding privileged communications) necessary for Seller and Colfax to pursue any indemnification or reimbursement from a third party for any Losses in the event that Seller or Colfax, in their sole discretion, decide to pursue such indemnification or reimbursement.

This Agreement may be terminated prior to the Closing as follows:

(a) At the election of Seller or Buyer on or after December 22, 2004 if the Closing shall not have occurred by the close of business on such date, provided that the terminating party is not in material default of any of its obligations hereunder;

(b) by mutual written consent of Seller and Buyer;

(c) by Buyer thirty (30) days following its delivery of written notice from Buyer to Seller that there has been an event, change, occurrence or circumstance that has had or could reasonably be expected to have a Material Adverse Effect and which has not been cured within the thirty (30) day period;

(d) by Seller or Buyer if there shall be in effect a final nonappealable Order of a Governmental Authority of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby; it being agreed that the parties hereto shall promptly appeal any adverse determination which is not nonappealable (and pursue such appeal with reasonable diligence);

(e) by Buyer, if there shall have been a material breach by Seller or Colfax of any representation, warranty, covenant or agreement of Seller or Colfax set forth in this Agreement, which breach would give rise to a failure of a condition set forth in Section 6.01 and is incapable of being cured or, if capable of being cured, shall not have been cured within thirty (30) days following receipt by Seller of notice of such breach from Buyer; or

(f) by Seller, if there shall have been a material breach by Buyer of any representation, warranty, covenant or agreement of Buyer set forth in this Agreement, which breach would give rise to a failure of a condition set forth in Section 7.01 and is incapable of being cured or, if capable of being cured, shall not have been cured within thirty (30) days following receipt by Buyer of notice of such breach from Seller.

In the event of termination and abandonment by Buyer or Seller, or both, pursuant to Section 10.01 hereof, written notice thereof shall forthwith be given to the other party, and this Agreement shall terminate, and the transactions contemplated hereunder shall be abandoned, without further action by Buyer or Seller.

In the event that this Agreement is validly terminated as provided herein, then each of the parties shall be relieved of their duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to Buyer or Seller; provided, however, that nothing in this Section 10.03 shall relieve Buyer, Seller or Colfax of any liability for a breach of this Agreement prior to the effective date of such termination and, provided, further, that the obligations set forth in Sections 5.15 concerning reimbursement of Seller expenses and Section 5.02(b) concerning confidentiality shall survive any such termination.

Each of the parties hereto agrees that it will, at any time prior to, at or after the Closing Date, take or cause to be taken such further actions, and execute, deliver and file or cause to be executed, delivered and filed such further documents and instruments, and obtain such consents and approvals, as may be necessary or reasonably requested in connection with the consummation of the purchase and sale contemplated by this Agreement or in order to fully effectuate the purposes, terms and conditions of this Agreement.

Subject to Section 5.09, each party hereto shall pay its own expenses incurred in connection with this Agreement and in the preparation for and consummation of the transactions provided for herein. Notwithstanding the foregoing, each of Buyer and Seller shall pay 50% of any costs of conveyances, notary fees, and sales, stamp, documentary, transfer, and recording taxes and fees applicable to the transactions contemplated by this Agreement and the instruments and documents called for hereunder.

All notices, demands, requests, or other communications which may be or are required to be given or made by any party to any other party pursuant to this Agreement shall be in writing and shall be hand delivered (including delivery by overnight courier), or transmitted by facsimile addressed as follows:

(i) If to Buyer:

Genstar Capital Partners III, L.P.

Four Embarcadero Center

Suite 1900

San Francisco, CA 94111

Attention: Jean-Pierre L. Conte

Fax: (415) 834-2383

with copies (which shall not constitute notice) to:

Weil, Gotshal & Manges LLP

201 Redwood Shores Parkway

Redwood Shores, CA 94065

Attention: Craig W. Adas, Esq.

Fax: (650) 802-3100

(ii) If to Seller or Colfax:

Colfax Corporation

Stony Point III

Suite 150

Richmond, VA 23235

Attention: John A. Young

Fax: 804-560-4076

with copies (which shall not constitute notice) to:

Colfax Corporation

997 Lenox Drive, Suite 111

Lawrenceville, NJ 08648

Attention: Thomas M. O’Brien, Esq.

Fax: 609-896-7633

and with copies (which shall not constitute notice) to

Hogan & Hartson L.L.P.

111 S. Calvert Street, Suite 1600

Baltimore, MD 21202

Attention: A. Lynne Puckett, Esq.

Fax: (410) 539-6981

or such other address as the addressee may indicate by written notice.

Each notice, demand, request, or communication which shall be given or made in the manner described above shall be deemed sufficiently given or made for all purposes at such time as it is delivered to the addressee (the affidavit of messenger or (with respect to a fax) the confirmation sheet being deemed conclusive but not exclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation.

No delay or failure on the part of any party hereto in exercising any right, power or privilege under this Agreement or under any other instrument or document given in connection with or pursuant to this Agreement shall impair any such right, power or privilege or be construed as a waiver of any default or any acquiescence therein. No single or partial exercise of any such right, power or privilege shall preclude the further exercise of such right, power or privilege, or the exercise of any other right, power or privilege. No waiver shall be valid against any party hereto unless made in writing and signed by the party against whom enforcement of such waiver is sought and then only to the extent expressly specified therein.

Except as hereinafter specifically provided in this Article XI, neither Buyer nor Seller shall assign this Agreement, in whole or in part, whether by operation of law or otherwise without the prior written consent of the other party. Any purported assignment contrary to the terms hereof shall be null, void and of no force and effect. Notwithstanding the foregoing, Buyer or any permitted assignee of Buyer may assign this Agreement and any and all rights hereunder, in whole or in part, prior to the Closing Date to any subsidiary of Buyer so long as Buyer unconditionally guarantees performance thereof by the assignee. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. No person or entity other than the parties hereto is or shall be entitled to bring any action to enforce any provision of this Agreement against any of the parties hereto, and the covenants and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, the parties hereto or their respective successors and assigns as permitted hereunder.

This Agreement, together with all Appendices and Schedules hereto, constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby.

If any part of any provision of this Agreement or any other agreement, document or writing given pursuant to or in connection with this Agreement shall be invalid or unenforceable under applicable law, such part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining parts of such provisions or the remaining provisions hereof or of said agreement, document or writing.

This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed under and in accordance with the laws of the State of Delaware, excluding the choice of law rules thereof.

This Agreement may be executed in separate counterparts, none of which need contain the signatures of all parties, each of which shall be deemed to be an original, and all of which taken together constitute one and the same instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than the number of counterparts containing the respective signatures of, or on behalf of, all of the parties hereto.

The parties hereto acknowledge and agree that the breach by any of them of this Agreement would cause irreparable damage to the other parties hereto and that they will not have an adequate remedy at law. Therefore, the obligations of the parties under this Agreement shall be enforceable by a decree of specific performance issued by any court of competent jurisdiction, and appropriate injunctive relief may be applied for and granted in connection therewith. Such remedies shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any party may have under this Agreement or otherwise.

If any dispute arises under or in connection with this Agreement or the performance or enforcement hereof, it shall be decided finally by an arbitrator in an arbitration proceeding conforming to the Rules of the American Arbitration Association applicable to commercial arbitration. The arbitrator shall be appointed by mutual agreement of the parties hereto. If they cannot agree, then the arbitrator shall be appointed by the American Arbitration Association. An arbitrator appointed by the American Arbitration Association shall be impartial. The arbitration shall take place in Chicago, Illinois. The decision of the arbitrator shall be conclusively binding upon the parties, final and nonappealable, and such decision shall be enforceable as a judgment in any court of competent jurisdiction. Each party shall pay the fees and expenses of its counsel and its witnesses. The parties shall share equally the fees and expenses of the arbitrator.

The parties hereto agree that nothing contained in this Agreement, including, but not limited to, the provisions set forth in Sections 3.23 and 5.10, is intended to be, or should be construed as relating to, binding, affecting, or requiring disclosure by or about Danaher Corporation, its affiliates or subsidiaries or their respective officers, directors, shareholders, member, partners, or employees. Buyer acknowledges that (i) Colfax, Seller, the Acquired Companies and the Subsidiaries have been controlled, directly or indirectly, by

certain stockholders who are also directors, officers or shareholders of Danaher Corporation, (ii) certain executive officers, employees or directors of the Seller, the Acquired Companies and Subsidiaries are also shareholders of Danaher Corporation, (iii) portions of the business of Danaher Corporation may be in competition with the Acquired Companies and Subsidiaries, and (iv) from time to time, the Seller and Acquired Companies and Subsidiaries have entered into business relationships with Danaher Corporation in the Ordinary Course of Business.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, each of the parties hereto has executed this LLC Purchase Agreement, or has caused this Agreement to be duly executed and delivered in its name on its behalf, all as of the day and year first above written.

	SELLER:


	WARNER ELECTRIC HOLDING, INC.


	By:
		Name: John A. Young
		Title: President and CEO

	COLFAX:


	COLFAX CORPORATION


	By:
		Name: John A. Young
		Title: President and CEO


	BUYER:

	CPT ACQUISITION CORP.

	By:
	Name: Jean-Pierre L. Conte
	Title: Chief Executive Officer

Appendix A

Definitions

“Acquired Company” means each of Power Transmission Holding LLC, a Delaware limited liability company, Warner Electric LLC, a Delaware limited liability company, Warner Electric Technology LLC, a Delaware limited liability company, Warner Electric International Holding, Inc., a Delaware corporation, Boston Gear LLC, a Delaware limited liability company, American Enterprises MPT Corp., a Delaware corporation, and Ameridrives Enterprises MPT Holdings, L.P., a Delaware limited partnership.

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, provided, however, that such term shall not include Danaher Corporation, or its successors, affiliates or subsidiaries. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

“Affiliated Group” means any affiliated group within the meaning of Section 1504(a) of the Code or any similar group defined under a similar provision of Law.

“Assets” means all assets of every kind and everything that is or may be available for the payment of liabilities (whether inchoate, tangible or intangible).

“Business” means the business of CPTG.

“Business Day” means any day other than a Saturday, Sunday or a day on which the banks in New York City are authorized or obligated by law or executive order to close.

“Buyer Indemnified Parties” shall have the meaning set forth in Section 9.02.

“Buyer Plans” shall have the meaning set forth in Section 5.04(b).

“Claims” shall have the meaning specified in Section 9.04.

“Closing” means the closing of the purchase, assignment and sale of the LLC Interests contemplated hereunder.

“Closing Date” means the time and date on which the Closing takes place, as established by Section 8.01.

“Colfax” means Colfax Corporation, a Delaware corporation, excluding all predecessors in interests.

“Company Contracts” shall have the meaning set forth in Section 3.12.

“Company Products” shall have the meaning set forth in Section 3.24.

“Contract” means any contract, agreement, indenture, note, bond, loan, instrument, lease, commitment or other arrangement or agreement, whether written or oral.

“Continuing Employees” shall have the meaning set forth in Section 5.03.

“CPTG” shall mean the Acquired Companies and the Subsidiaries, collectively.

“EKI Documents” means all environmental health and safety assessments, audits, investigations, documents and reports regarding the environmental condition of the Real Property or compliance with Environmental Laws by the Acquired Companies and the Subsidiaries in connection with CPTG, which are maintained in the files of Erler & Kalinowki, Inc. and made available to Buyer.

“Eligible Claim” shall have the meaning set forth in Section 9.02(b).

“Environmental Laws” means any applicable Laws relating to (a) the remediation, generation, production, installation, use, storage, treatment, transportation, release, or disposal of Hazardous Substances or (b) the protection of natural resources, the environment, or human health and safety including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. sections 9601 et seq. (“CERCLA”), the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et seq., the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. § 6901 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. § 136 et seq., the Oil Pollution Act of 1990, 33 U.S.C § 2701 et seq. and the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq. (to the extent it relates to Hazardous Substances), as such laws have been amended or supplemented, and the regulations promulgated pursuant thereto, and all analogous applicable foreign, federal, state or local Laws.

“Governmental Authority” means any government or political subdivision, whether federal, state, local or foreign, or any agency or instrumentality of any such government or political subdivision, or any federal, state, local or foreign court or arbitrator.

“Hazardous Substances” means any wastes, substances, radiation, or materials (whether solids, liquids or gases) that are listed, regulated or defined under any Environmental Laws, including but not limited to “hazardous substances” listed under “CERCLA” and petroleum or any derivatives thereof, asbestos, or any material classified, characterized or regulated as “hazardous,” “toxic,” “pollutant,” or “contaminant” or words of similar meaning under Environmental Laws.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended and the rules and regulations promulgated thereunder.

“Indemnified Parties” shall have the meaning set forth in Section 9.02.

“Indemnity Basket” shall have the meaning set forth in Section 9.02(b).

“Indemnity Cap” shall have the meaning set forth in Section 9.02(b).

“Indemnity Escrow Agent” shall have the meaning set forth in Section 9.02(c).

“Indemnity Escrow Agreement” shall have the meaning set forth in Section 9.02(c).

“Indemnity Escrow Amount” shall have the meaning set forth in Section 9.02(c).

“Intellectual Property” shall have the meaning specified in Section 3.07.

“Known Environmental Condition” means any Release or suspect Release of Hazardous Substances or other fact or circumstance, including violations of Environmental Laws, that could result in Losses under Environmental Law disclosed to Buyer (a) prior to the Closing, including but not limited to, in the EKI Documents or any Phase I prepared for Buyer; or (b) after Closing, in connection with any investigation of the matters referred to in (a), including but not limited to, any investigation of the matters listed on the “Material Issues List” dated October 15, 2004.

“Laws” means any law, statute, code, ordinance, regulation or other legally enforceable requirement of any Governmental Authority.

“Liens” means any mortgage, lien, option, encumbrance, restriction, pledge, adverse claim, interest, charge or other similar encumbrance.

“LLC Interests” means all of the limited liability company interest owned by Seller in PT.

“Losses” shall have the meaning set forth in Section 9.02(a).

“Material Adverse Effect” as it applies to Acquired Companies and the Subsidiaries means a material adverse effect on the business, assets, properties, results of operations, or condition (financial or otherwise) of the Acquired Companies and the Subsidiaries or of the Business, taken as a whole, except for any changes or effects resulting from (i) the announcement or performance of the transactions contemplated by this Agreement, (ii) changes arising after the date of this Agreement in any Law, (iii) changes arising after the date of this Agreement in the industries in which the Acquired Companies and Subsidiaries operate provided that the changes do not disproportionately affect the Acquired Companies and the Subsidiaries, taken as a whole, compared with other businesses in the industries in which they operate or (iv) changes arising after the date of this Agreement in general economic conditions.

“Non-Basket Representations” shall have the meaning set forth in Section 9.02(a).

“Order” means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award.

“Ordinary Course of Business” means the ordinary and usual course of normal day-to-day operations of the Business through the date hereof consistent with past practice.

“Other Party” shall have the meaning set forth in Section 9.06(a)

“Performing Party” shall have the meaning set forth in Section 9.06(a).

“Permits” means any license, permit, authorization, grant, approval, franchise, waiver, consent, qualification or similar document or authority issued or granted by any Governmental Authority.

“Person” means any individual, sole proprietorship, partnership, corporation, limited liability company, joint venture, unincorporated society or association, trust or other entity or Governmental Authority.

“Purchase Price” shall have the meaning specified in Section 2.02.

“Real Property” means all of the Acquired Companies’ and Subsidiaries’ real property and interests in real property exclusively used in the business or operations of the Acquired Companies and the Subsidiaries as of the date of this Agreement, together with any additions thereto between the date of this Agreement and the Closing Date; provided, however that Real Property does not include the property located at Roscoe, Illinois; Bishop Auckland, United Kingdom; and Waukesha, Wisconsin.

“Restricted Business” shall have the meaning specified in Section 5.10.

“Release” means any presence, emission, spill, seepage, leak, escape, leaching, discharge, injection, pumping, pouring, emptying, dumping, disposal, migration, or release or threatened release of Hazardous Substances from any source into or upon the environment, including the air, soil, improvements, surface water, groundwater, the sewer, septic system, storm drain, publicly owned treatment works, or waste treatment, storage, or disposal systems.

“Remediation” means any investigation, clean-up, removal action, remedial action, restoration, repair, response action, corrective action, monitoring, sampling and analysis, installation, reclamation, closure, or post-closure in connection with the suspected, threatened or actual Release of Hazardous Substances.

“Retained Liability Claims” means any Losses arising from (i) the manufacture and distribution of any product sold or manufactured by Colfax, Seller, the Acquired Companies or the Subsidiaries prior to the Closing Date containing asbestos, (ii) the ownership of the properties located at Roscoe, Illinois; Bishop Auckland, United Kingdom; and Waukesha, Wisconsin or (iii) Section 5.08(g)(i).

“Seller” means Warner Electric Holding, Inc., a Delaware corporation, excluding all predecessors in interests.

“Seller Indemnified Parties” shall have the meaning set forth in Section 9.04.

“Seller’s Knowledge” means the knowledge, after due inquiry, of the following individuals: John Young (CEO Colfax Corporation), Charlie Nims (President of CPTG), Scott Faison (Acting VP of Finance of CPTG), Matt Taylor (VP and General Manager Warner Electric), Ed Novotny (VP and General Manager of Boston Gear), Mark Stuebe (General

Manager, Heavy Duty Clutch Brakes), Dave Zietlow (General Manager, Ameridrives Couplings), John Proven (Operations Manager, Nuttall Gear), Craig Schuele (VP Marketing and Business Development, CPTG), Gerry Ferris (VP of Sales for Standard Products), Eric Prat, Norbert Liebenstein and William Flexon.

“Straddle Period” shall have the meaning set forth in Section 5.08(b).

“Subsidiaries” means those wholly owned subsidiaries of the Acquired Companies identified on Schedule 2 of this Agreement.

“Tax or Taxes” means any domestic or foreign federal, state or local income, franchise, business, occupation, sales/use, manufacturer’s excise, payroll, withholding, Federal Insurance Contributions Act and employment and unemployment taxes, value added taxes, personal and real property taxes and all other taxes or charges (including all interest and penalties) measured, assessed, levied, imposed or collected by any Governmental Authority or payable by reason of contract, assumption, transferee liability, operation of Law, Treasury Regulation section 1.1502-6(a) (or any similar provision of Law) or otherwise.

“Tax Benefit” means the net reduction of liability for Taxes resulting from any loss, deduction, credit or other item.

“Tax Returns” means all tax returns (including information returns) and reports that are or were required to be filed by, or with respect to, the Acquired Companies and the Subsidiaries or their income, properties or operations.

“TSA” means the Transition Services Agreement described in Section 5.18.

“Unknown Environmental Conditions” means any Release of Hazardous Substances or other fact or circumstance, including violations of Environmental Laws, that could result in Losses under Environmental Law that is not a Known Environmental Condition.

All references to Sections, Appendices and Schedules are to Sections of and Appendices and Schedules to this Agreement.

LIST OF SCHEDULES

Schedule 1		Acquired Companies

Schedule 2		Subsidiaries

Schedule 2.03(a)		Peg Balance Sheet with Agreed Principles and Net Working Capital as of September 30, 2004

Schedule 3.01		Authorization

Schedule 3.03(b)		Organization and Standing

Schedule 3.04		Capitalization

Schedule 3.05(a)		Litigation; Compliance with Law

Schedule 3.05(c)		Tax Abatement

Schedule 3.06(a)		Seller Financial Statements and Condition

Schedule 3.06(b)		Financial Statements and Condition (pro forma for CPTG)

Schedule 3.07 (a)		Intellectual Property; Licenses

Schedule 3.07 (b)		None

Schedule 3.08(a)		Property, Assets, and Leases

Schedule 3.08(b)		Owned and Leased Real Property

Schedule 3.08(b)ii)		None

Schedule 3.08(c)		Leases and Subleases

Schedule 3.10(a)		Taxes

Schedule 3.10(b)		Income and Franchise and Other Filed Tax Return

Schedule 3.10(d)		None

Schedule 3.10(e)		Deficiencies, Assessments

Schedule 3.10(l)		Depreciable Property

Schedule 3.10(m)		Tax Sharing; Allocation Agreements

Schedule 3.11(a)		Employee Benefits

Schedule 3.11(c)		Company Benefit Plans

Schedule 3.11(d)		Insurance Policies Funding; Company Benefit Plan

Schedule 3.11(e)		Multiemployer Plans

Schedule 3.11(f)		PBGC

Schedule 3.11(g)		Severance

Schedule 3.11(h)		None

Schedule 3.11(i)		None

Schedule 3.11(j)		Foreign Benefit Plans

Schedule 3.12		Acquired Companies’ Contracts

Schedule 3.13		Environmental Matters

Schedule 3.14		Bank Accounts

Schedule 3.16(a)		Labor Matters

Schedule 3.16(c)		None

Schedule 3.17		No Undisclosed Liabilities

Schedule 3.18		Debt Instruments

Schedule 3.19		Conduct of Business; Absence of Material Adverse Change

Schedule 3.20		Insurance

Schedule 3.22		Customers and Suppliers

Schedule 3.23		None

Schedule 5.01		None

Schedule 5.01(d)		None

Schedule 5.04(a)		Transition Agreements

Schedule 5.04(d)(v)		Actuarial Assumptions and Procedures

Schedule 5.04(h)		Bonus Arrangements

Schedule 5.17		“Swoosh” Trademark

Schedule 1

ACQUIRED COMPANIES

OWNER	NUMBER OF SHARES/PARTNERSHIP INTERESTS	ACQUIRED COMPANY
WARNER ELECTRIC HOLDING, INC.	ONE UNDIVIDED MEMBER INTEREST	POWER TRANSMISSION HOLDING LLC

POWER TRANSMISSION HOLDING LLC	200,002,000	AMERICAN ENTERPRISES MPT CORP.

POWER TRANSMISSION HOLDING LLC	40.6% INCLUDING 1% GENERAL PARTNERSHIP INTEREST	AMERIDRIVES ENTERPRISE MPT HOLDINGS, L.P.

POWER TRANSMISSION HOLDING LLC	ONE UNDIVIDED MEMBER INTEREST	WARNER ELECTRIC LLC

POWER TRANSMISSION HOLDING LLC	ONE UNDIVIDED MEMBER INTEREST	WARNER ELECTRIC TECHNOLOGY LLC

POWER TRANSMISSION HOLDING LLC	ONE UNDIVIDED MEMBER INTEREST	BOSTON GEAR LLC

POWER TRANSMISSION HOLDING LLC	1,000	WARNER ELECTRIC INTERNATIONAL HOLDING, INC.

Schedule 2

SUBSIDIARIES

OWNER	NUMBER OF SHARES/PARTNERSHIP INTERESTS	ACQUIRED COMPANY
WARNER ELECTRIC LLC	603,000 UNITS	FORMSPRAG LLC (70%)

AMERICAN ENTERPRISES MPT CORPORATION	ONE UNDIVIDED MEMBER INTEREST	NUTTALL GEAR LLC

AMERICAN ENTERPRISES MPT CORPORATION	59.4% LIMITED PARTNERSHIP INTEREST	AMERICAN ENTERPRISES MPT HOLDINGS, L.P.

AMERICAN ENTERPRISES MPT CORPORATION	1% GENERAL PARTNER INTEREST	AMERIDRIVES INTERNATIONAL, L.P.

AMERICAN ENTERPRISES MPT HOLDINGS, L.P.	99% LIMITED PARTNER INTEREST	AMERIDRIVES INTERNATIONAL, L.P.

WARNER ELECTRIC INTERNATIONAL HOLDING INC.	SEE SCHEDULE 3.04 FOR OWNERSHIP OF FOREIGN SUBSIDIARIES

AMERIDRIVES INTERNATIONAL, L.P.	258,249 UNITS	FORMSPRAG LLC (30%)

EX-2.2 4 a2155511zex-2_2.htm EXHIBIT 2.2

Exhibit 2.2

ASSIGNMENT AND ASSUMPTION AGREEMENT

W I T N E S S E T H:

WHEREAS, Holdings (formerly CPT Acquisition Corp.), Warner Electric Holding, Inc. (“Warner”) and Colfax Corporation (“Colfax” and, together with Warner, the “Sellers”) have entered into that certain LLC Purchase Agreement, dated as of October 25, 2004 (the “LLC Purchase Agreement”), pursuant to which the parties contemplated that Holdings would acquire all of the limited liability company interests of Power Transmission Holding LLC (“PT Holding”) from Sellers;

WHEREAS, in accordance with Section 11.05 of the LLC Purchase Agreement, Holdings desires to assign to Altra all of Holdings’ right, title and interest in, under and to the LLC Purchase Agreement; and

WHEREAS, Altra desires to accept such assignment and assumption of the LLC Purchase Agreement.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

1. Assignment. In accordance with and subject to the terms of this Agreement, Holdings hereby sells, assigns, transfers and conveys to Altra, to the extent that such are legally assignable, all of Holdings’ right, title and interest in, under and to the LLC Purchase Agreement.

2. Acceptance and Assumption. In accordance with and subject to the terms of this Agreement, Altra hereby accepts the assignment, transfer and conveyance, to the extent that such are legally assignable, of Holdings’ right, title and interests in, under and to the LLC Agreement.

3. Parties in Interest. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

4. Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, and all of which together shall constitute one and the same instrument.

5. Governing Law. This Agreement and the rights and obligations of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware as applied to contracts made and performed entirely in such state.

6. Definitions. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the LLC Purchase Agreement.

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date first written above.

	ALTRA HOLDINGS, INC.


	By:
		Name: Michael L. Hurt
		Title: Chief Executive Officer


	ALTRA INDUSTRIAL MOTION, INC.


	By:
		Name: Michael L. Hurt
		Title: Chief Executive Officer

[LLC Purchase Agreement Assignment]

EX-3.1 5 a2155511zex-3_1.htm EXHIBIT 3.1

Exhibit 3.1

CERTIFICATE OF INCORPORATION
OF
ALTRA INDUSTRIAL MOTION, INC.

ARTICLE I.

The name of the Corporation is Altra Industrial Motion, Inc. (the “Corporation”).

ARTICLE II.

The address of the registered office of the Corporation in the State of Delaware is 9 East Loockerman Street, Suite 1B, City of Dover, 19901, County of Kent, State of Delaware. The name of the registered agent of the Corporation in the State of Delaware at such address is National Registered Agents, Inc.

ARTICLE III.

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware, as from time to time amended.

ARTICLE IV.

The name and mailing address of the incorporator is Ryan P. Gallagher, c/o Weil, Gotshal & Manges LLP, 201 Redwood Shores Parkway, Redwood Shores, CA 94065.

ARTICLE V.

The Corporation is authorized to issue one (1) class of stock to be designated “Common Stock.” The total number of shares of Common Stock which the Corporation is authorized to issue is one thousand (1,000) shares, $0.001 par value.

ARTICLE VI.

(a) A director of the Corporation shall not be personally liable either to the Corporation or to any stockholder for monetary damages for breach of fiduciary duty as a director, except (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, or (ii) for acts or omissions which are not in good faith or which involve intentional misconduct or knowing violation of the law, or (iii) for any matter in respect of which such director shall be liable under Section 174 of Title 8 of the General Corporation Law of the State of Delaware or any amendment thereto or successor provision thereto, or (iv) for any transaction from which the director shall have derived an improper personal benefit. Neither amendment nor repeal of this paragraph

(a) nor the adoption of any provision of the Certificate of Incorporation inconsistent with this paragraph (a) shall eliminate or reduce the effect of this paragraph (a) in respect of any matter occurring, or any cause of action, suit or claim that, but for this paragraph (a) of this Article, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.

(b) The Corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to, or testifies in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative in nature, by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding to the full extent permitted by law, and the Corporation may adopt Bylaws or enter into agreements with any such person for the purpose of providing for such indemnification.

ARTICLE VII.

The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred on stockholders herein are granted subject to this reservation.

ARTICLE VIII.

Election of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.

ARTICLE IX.

The number of directors which shall constitute the whole Board of Directors of the Corporation shall be fixed from time to time by, or in the manner provided in, the Bylaws of the Corporation or in an amendment thereof duly adopted by the Board of Directors of the Corporation or by the stockholders of the Corporation.

ARTICLE X.

Meetings of stockholders of the Corporation may be held within or without the State of Delaware, as the Bylaws of the Corporation may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors of the Corporation or in the Bylaws of the Corporation.

ARTICLE XI.

Except as otherwise provided in this Certificate of Incorporation, in furtherance and not in limitation of the powers conferred by statute, the Board of Directors of the Corporation is expressly authorized to make, repeal, alter, amend and rescind any or all of the Bylaws of the Corporation.

IN WITNESS WHEREOF, the undersigned has duly executed this Certificate of Incorporation on this 8^th day of November, 2004.

	By:
		Ryan P. Gallagher
		Sole Incorporator

EX-3.2 6 a2155511zex-3_2.htm EXHIBIT 3.2

Exhibit 3.2

BYLAWS

ALTRA INDUSTRIAL MOTION, INC.

a Delaware corporation

Except as otherwise provided in the Certificate of Incorporation, these Bylaws may be altered, amended or repealed, or new Bylaws may be adopted, by the holders of a majority of the outstanding voting shares or by the Board of Directors, when such power is conferred upon the Board of Directors by the Certificate of Incorporation, at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new Bylaws be contained in the notice of such special meeting. If the power to adopt, amend or repeal Bylaws is conferred upon the Board of Directors by the Certificate of Incorporation, it shall not divest or limit the power of the stockholders to adopt, amend or repeal Bylaws.

CERTIFICATE OF SECRETARY

ALTRA INDUSTRIAL MOTION, INC.

The undersigned certifies:

1. That the undersigned is the duly elected and acting Secretary of Altra Industrial Motion, Inc., a Delaware corporation (the “Corporation”); and

2. That the foregoing Bylaws constitute the Bylaws of the Corporation as duly adopted by the Action by Unanimous Written Consent in Lieu of the Organizational Meeting by the Board of Directors of Altra Industrial Motion, Inc., dated the 8th day of November, 2004.

IN WITNESS WHEREOF, the undersigned has executed this certificate as of this 8th day of November, 2004.


	Charles W. Nims, Secretary

EX-3.3 7 a2155511zex-3_3.htm EXHIBIT 3.3

Exhibit 3.3

State of Delaware
Secretary of State
Division of Corporations
Delivered 07:13 PM 05/22/2003
FILED 07:13 PM 05/22/2003
SRV 030337236 – 2673186 FILE

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

AMERICAN ENTERPRISES MPT CORP.

American Enterprises MPT Corp., a corporation organized and existing under the laws and by virtue of the Delaware General Corporation Law (“DGCL”) does hereby certify:

1. That the original Certificate of Incorporation of American Enterprises MPT Corp. (the “Corporation”) was filed with the Secretary of State of the State of Delaware on October 15, 1996.

2. This Amended and Restated Certificate of Incorporation (i) restates, integrates and further amends the Corporation’s Certificate of Incorporation by, among other things, amending ARTICLE FOURTH, (ii) was duly adopted in accordance with the provisions of Sections 242 and 245 of the DGCL, and (iii) was approved by written consent of the stockholders of the Corporation in accordance with the provisions of Sections 228, 242 and 245 of the DGCL (prompt notice of such action having been or to be given to those stockholders who did not consent in writing).

3. The text of the Amended and Restated Certificate of Incorporation of the Corporation is hereby amended and restated in its entirety to read as follows:

FIRST: The name of the Corporation is:

AMERICAN ENTERPRISES MPT CORP.

SECOND: The address of its registered office in the State of Delaware is 2711 Centerville Road, Suite 400, New Castle County, Wilmington, DE 19808. The name of its registered agent at such address is Corporation Service Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

FOURTH: The total number of shares of capital stock which the Corporation shall have authority to issue is Two Hundred Million Five Hundred Thousand (200,500,000), consisting solely of: (a) Two Hundred Million One Hundred Thousand (200,100,000) shares of Common Stock, $.001 par value per share (the “Common Stock”) and (b) Four Hundred Thousand (400,000) shares of Preferred Stock, $.001 par value per share (the “Preferred Stock”).

Following is a statement of the designations, powers, privileges and rights and the qualifications, limitations and restrictions, in respect of each class of capital stock of the Corporation.

A. PREFERRED STOCK.

1. Preferred Stock Generally.

Preferred Stock may be issued from time to time in one or more series, each of such series to have such terms as stated or expressed herein and in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors of the Corporation as hereinafter provided. Any shares of Preferred Stock which may be redeemed, purchased or acquired by the Corporation may be reissued except as otherwise provided by law. Different series of Preferred Stock shall not be construed to constitute different classes of shares for the purposes of voting by classes unless expressly provided.

Authority is hereby expressly granted to the Board of Directors from time to time to issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by resolution or resolutions providing for the issue of the shares thereof, to determine and fix such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including without limitation thereof, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be stated and expressed in such resolutions, all to the full extent now or hereafter permitted by the DGCL. Without limiting the generality of the foregoing, the resolutions providing for issuance of any series of Preferred Stock may provide that such series shall be superior, equal or junior to the Preferred Stock of any other series to the extent permitted by law. Except as otherwise provided in this Amended and Restated Certificate of Incorporation, no vote of the holders of the Preferred Stock or Common Stock shall be a prerequisite to the designation or issuance

of any shares of any series of the Preferred Stock authorized by and complying with the conditions of this Amended and Restated Certificate of Incorporation, the right to have such vote being expressly waived by all present and future holders of the capital stock of the Corporation.

B. COMMON STOCK.

1. Terms Applicable to Common Stock.

1.1. Dividend and Other Rights of Common Stock.

(a) Ratable Treatment. Except as specifically otherwise provided herein, all shares of Common Stock shall be identical and shall entitle the holders thereof to the same rights and privileges. The Corporation shall not subdivide or combine any shares of Common Stock, or pay any dividend or retire any share or make any other distribution on any share of Common Stock, or accord any other payment, benefit or preference to any share of Common Stock, except by extending such subdivision, combination, distribution, payment, benefit or preference equally to all shares of Common Stock.

(b) Dividends. Subject to the rights of the holders of Preferred Stock, if any, the holders of Common Stock shall be entitled to dividends out of funds legally available therefor, when declared by the Board of Directors in respect of Common Stock, and, upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, to share ratably in the assets of the Corporation available for distribution to the holders of Common Stock.

1.2. Voting Rights of Common Stock. Except as otherwise provided by law or this Amended and Restated Certificate of Incorporation, the holders of Common Stock shall have full voting rights and powers to vote on all matters submitted to stockholders of the Corporation for vote, consent or approval, and each holder of Common Stock shall be entitled to one vote for each share of Common Stock held of record by such holder.

C. PROVISIONS OF COMMON APPLICATION.

1. Registration of Transfer. The Corporation will keep at its principal executive offices a register for the registration of Preferred Stock and Common Stock. Upon the surrender of any certificate representing Preferred Stock or Common Stock at such place, the Corporation will, at the

request of the record holder of such certificate, execute and deliver a new certificate or certificates in exchange therefor representing in the aggregate the number of shares of Preferred Stock or Common Stock represented by the surrendered certificate. Each such new certificate will be registered in such name and will represent such number of shares of Preferred Stock or Common Stock as is requested by the holder of the surrendered certificate and will be substantially identical in form to the surrendered certificate. The issuance of new certificates will be made without charge to the holders of the surrendered certificates for any issuance tax in respect thereof or other cost incurred by the Corporation in connection with such issuance, unless such issuance is made in connection with a transfer of Preferred Stock or Common Stock, in which case the transferring holder will pay all taxes arising from such transfer.

2. Replacement. Upon receipt of evidence reasonably satisfactory to the Corporation (an affidavit of and indemnification by the registered holder will be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing shares of Preferred Stock or Common Stock, and in the case of any such loss, theft or destruction upon receipt of indemnity reasonably satisfactory to the Corporation, or, in the case of any such mutilation upon surrender of such certificate, the Corporation will (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the number of shares of Preferred Stock or number of shares of Common Stock represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate.

3. Notices. Except as otherwise expressly provided, all notices referred to herein will be in writing and will be deemed properly delivered if either personally delivered or sent by overnight courier or mailed certified or registered mail, return receipt requested, postage prepaid, to the recipient (a) in the case of any stockholder, at such holder’s address as it appears in the stock records of the Corporation (unless otherwise indicated by any such holder) and (b) in the case of the Corporation, at its principal executive offices. Any such notice shall be effective (i) if delivered personally or by telecopier, when received prior to 5:00 P.M. EST (and, if later, on the next succeeding business day), (ii) if sent by overnight courier, when receipted for or refused, and (iii) if mailed when receipted for or refused.

4. Equitable Adjustments. Notwithstanding anything contained herein, all references herein to per share amounts, including numbers of shares and prices per share of a certain class or series of stock, whether in a dollar ($) amount or otherwise, shall be subject to proportionate adjustment

in the case of stock splits, stock dividends, combinations, recapitalizations, reorganizations, reclassifications and the like affecting such class or series of stock.

FIFTH: The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation and for defining and regulating the powers of the Corporation and its directors and stockholders and are in furtherance and not in limitation of the powers conferred upon the Corporation by applicable law, the Bylaws or other organizational documents of the Corporation:

(a) The election of directors need not be by written ballot.

(b) The Board of Directors shall have the power and authority:

(1) to adopt, amend or repeal Bylaws of the Corporation, subject only to such limitation, if any, as may be from time to time imposed by law or by the Bylaws; and

(2) subject to any provision of the Bylaws or applicable law, to determine whether, to what extent, at what times and places and under what conditions and regulations the accounts, books and papers of the Corporation (other than the stock ledger), or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account, book or paper of the Corporation except as conferred by applicable law or authorized by the Bylaws or by the Board of Directors.

SIXTH: No director or officer of the Corporation shall be personally liable to the Corporation or to any stockholders of the Corporation for monetary damages for breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability; provided, however, that to the extent required from time to time by applicable law, this Article Sixth shall not eliminate or limit the liability of a director or officer, to the extent such liability is provided by applicable law (but subject to the terms of any employment agreement applicable to such director or officer), (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director or officer derived an improper personal benefit.

If the DGCL or any other statute of the State of Delaware hereafter is amended to authorize the further elimination or limitation of the liability of

directors and/or officers of the Corporation, then the liability of a director or officer of the Corporation shall be limited to the fullest extent permitted by the statutes of the State of Delaware, as so amended, and such elimination or limitation of liability shall be in addition to, and not in lieu of, the limitation on the liability of a director or officer provided by the foregoing provisions of this Article Sixth.

Any repeal of or amendment to this Article Sixth shall be prospective only and shall not adversely affect any limitation on the liability of a director or officer of the Corporation existing at the time of such repeal or amendment.

SEVENTH: To the extent permitted by law, the Corporation shall fully indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) by reason of the fact that such person is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding.

To the extent permitted by law, the Corporation may fully indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) by reason of the fact that such person is or was an employee or agent of the Corporation, or is or was serving at the request of the Corporation as an employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding.

The Corporation may advance expenses (including attorneys’ fees) incurred by a director or officer in defending any action, suit, or proceeding in advance of the final disposition of such action, suit or proceeding upon the receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that such director or officer is not entitled to indemnification. The Corporation may advance expenses (including attorneys’ fees) incurred by an employee or agent in defending any action, suit, or proceeding in advance of the final disposition of such action,

suit or proceeding upon such terms and conditions, if any, as the Board deems appropriate.

EIGHTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute and this Amended and Restated Certificate of Incorporation, and all rights conferred upon stockholders herein are granted subject to this reservation.

NINTH: In the event that a director of the Corporation who is also a holder, or a partner or employee of a holder, of Preferred Stock or Common Stock, or an entity affiliated with a holder of Preferred Stock or Common Stock (including a management company providing investment or other management services to a holder of Preferred Stock or Common Stock), or who is a person designated by a holder of Preferred Stock or Common Stock under any stockholders’ agreement to be a director of the Corporation, acquires knowledge of a matter which may be a corporate opportunity for both the Corporation and such holder of Preferred Stock or Common Stock, such person shall to the fullest extent permitted by law be considered to have fully satisfied and fulfilled his or her fiduciary duty with respect to such corporate opportunity, and the Corporation to the fullest extent permitted by law waives any claim that such matter constituted a corporate opportunity that should have been presented to or reserved for the benefit of the Corporation, if such opportunity was not expressly offered to such person solely in his or her capacity as a director of the Corporation with the explicit condition that such opportunity was intended for the exclusive benefit of the Corporation.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be signed by John A. Young, its President and Chief Executive Officer this 22 day of May 2003.

	AMERICAN ENTERPRISES MPT CORP.


	/s/ John A. Young
	John A. Young

EX-3.4 8 a2155511zex-3_4.htm EXHIBIT 3.4

Exhibit 3.4

BYLAWS

AMERICAN ENTERPRISES MPT CORP.

1. OFFICES

1.1. Registered Office

The initial registered office of the Corporation shall be in Wilmington, Delaware, and the initial registered agent in charge thereof shall be Corporation Service Company.

1.2. Other Offices

The Corporation may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or as may be necessary or useful in connection with the business of the Corporation.

2. MEETINGS OF STOCKHOLDERS

2.1. Place of Meetings

All meetings of the stockholders shall be held at such place as may be fixed from time to time by the Board of Directors, the Chairperson or the President.

2.2. Annual Meetings

The Corporation shall hold annual meetings of stockholders, commencing with the year 1997, on such date and at such time as shall be designated from time to time by the Board of Directors, the Chairperson or the President, at which stockholders shall elect a Board of Directors and transact such other business as may properly be brought before the meeting.

2.3. Special Meetings

Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the Board of Directors, the Chairperson or the President.

2.4. Notice of Meetings

Notice of any meeting of stockholders, stating the place, date and hour of the meeting, and (if it is a special meeting) the purpose or purposes for which the meeting is called, shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting (except to the extent that such notice is waived or is not required as provided in the General Corporation Law of the State of Delaware (the “Delaware General Corporation Law”) or these Bylaws). Such notice shall be given in accordance with, and shall be deemed effective as set forth in, Section 222 (or any successor section) of the Delaware General Corporation Law.

2.5. Waivers of Notice

Whenever the giving of any notice is required by statute, the Certificate of Incorporation or these Bylaws, a waiver thereof, in writing and delivered to the Corporation, signed by the person or persons entitled to said notice, whether before or after the event as to which such notice is required, shall be deemed equivalent to notice. Attendance of a stockholder at a meeting shall constitute a waiver of notice (1) of such meeting, except when the stockholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting, and (2) (if it is a special meeting) of consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the stockholder objects to considering the matter at the beginning of the meeting.

2.6. Business at Special Meetings

Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice (except to the extent that such notice is waived or is not required as provided in the Delaware General Corporation Law or these Bylaws).

2.7. List of Stockholders

After the record date for a meeting of stockholders has been fixed, at least ten days before such meeting, the officer who has charge of the stock ledger of the Corporation shall make a list of all stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place in the city where the meeting is to be held, which place is to be specified in the notice of the meeting, or at the place where the meeting is to

be held. Such list shall also, for the duration of the meeting, be produced and kept open to the examination of any stockholder who is present at the time and place of the meeting.

2.8. Quorum at Meetings

Stockholders may take action on a matter at a meeting only if a quorum exists with respect to that matter. Except as otherwise provided by statute or by the Certificate of Incorporation, the holders of a majority of the stock issued and outstanding and entitled to vote at the meeting, and who are present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. Once a share is represented for any purpose at a meeting (other than solely to object (1) to holding the meeting or transacting business at the meeting, or (2) (if it is a special meeting) to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice), it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for the adjourned meeting. The holders of a majority of the voting shares represented at a meeting, whether or not a quorum is present, may adjourn such meeting from time to time.

2.9. Voting and Proxies

Unless otherwise provided in the Delaware General Corporation Law or in the Corporation’s Certificate of Incorporation, and subject to the other provisions of these Bylaws, each stockholder shall be entitled to one vote on each matter, in person or by proxy, for each share of the Corporation’s capital stock that has voting power and that is held by such stockholder. No proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed appointment of proxy shall be irrevocable if the appointment form states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power.

2.10. Required Vote

If a quorum exists, action on a matter (other than the election of directors) is approved if the votes cast favoring the action exceed the votes cast opposing the action, unless the Certificate of Incorporation or the Delaware General Corporation Law requires a greater number of affirmative votes (in which case such different requirement shall apply). Directors shall be elected by a plurality of the votes cast by the shares entitled to vote in the election (provided a quorum exists), and the election of directors need not be by written ballot.

2.11. Action Without a Meeting

Any action required or permitted to be taken at a stockholders’ meeting may be taken without a meeting if the action is taken by persons who would be entitled to vote at a meeting and who hold shares having voting power to cast not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting at which all stockholders entitled to vote were present and voted. The action must be evidenced by one or more written consents describing the action taken, signed by the stockholders entitled to take action without a meeting, and delivered to the Corporation for inclusion in the minute book. No consent shall be effective to take the corporate action specified unless the number of consents required to take such action are delivered to the Corporation within sixty days of the delivery of the earliest-dated consent. All stockholders entitled to vote on the record date of such written consent who do not participate in taking the action shall be given written notice thereof in accordance with the Delaware General Corporation Law.

3. DIRECTORS

3.1. Powers

The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things, subject to any limitation set forth in the Certificate of Incorporation, these Bylaws, or agreements among stockholders which are otherwise lawful.

3.2. Number and Election

The number of directors which shall constitute the whole board shall not be fewer than one nor more than seven. The first board shall consist of two. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the Board of Directors.

3.3. Nomination of Directors

The Board of Directors shall nominate candidates to stand for election as directors; and other candidates also may be nominated by any Corporation stockholder, provided such other nomination(s) are submitted in writing to the Secretary of the Corporation no later than 90 days prior to the meeting of stockholders at which such directors are to be elected, together with the identity of the nominor and the number of shares of the Corporation’s stock owned, directly or indirectly, by the nominor. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 3.4 hereof, and each director elected

shall hold office until such director’s successor is elected and qualified or until the director’s earlier resignation or removal. Directors need not be stockholders.

3.4. Vacancies

Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by the stockholders or by a majority of the directors then in office, although fewer than a quorum, or by a sole remaining director. Each director so chosen shall hold office until the next election of directors, and until such director’s successor is elected and qualified, or until the director’s earlier resignation or removal. In the event that one or more directors resigns from the board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office until the next election of directors, and until such director’s successor is elected and qualified, or until the director’s earlier resignation or removal.

3.5. Meetings

3.5.1. Regular Meetings

Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors.

3.5.2. Special Meetings

Special meetings of the Board may be called by the Chairperson or President on one day’s notice to each director, either personally or by telephone, express delivery service (so that the scheduled delivery date of the notice is at least one day in advance of the meeting), telegram or facsimile transmission, and on five days’ notice by mail (effective upon deposit of such notice in the mail). The notice need not describe the purpose of a special meeting.

3.5.3. Telephone Meetings

Members of the Board of Directors may participate in a meeting of the board by any communication by means of which all participating directors can simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.

3.5.4. Action Without Meeting

Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if the action is taken by all

members of the Board. The action must be evidenced by one or more written consents describing the action taken, signed by each director, and delivered to the Corporation for inclusion in the minute book.

3.5.5. Waiver of Notice of Meeting

A director may waive any notice required by statute, the Certificate of Incorporation or these Bylaws before or after the date and time stated in the notice. Except as set forth below, the waiver must be in writing, signed by the director entitled to the notice, and delivered to the Corporation for inclusion in the minute book. Notwithstanding the foregoing, a director’s attendance at or participation in a meeting waives any required notice to the director of the meeting unless the director at the beginning of the meeting objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.

3.6. Quorum and Vote at Meetings

At all meetings of the board, a quorum of the Board of Directors consists of a majority of the total number of directors prescribed pursuant to Section 3.2 of these Bylaws (or, if no number is prescribed, the number in office immediately before the meeting begins). The vote of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation or by these bylaws.

3.7. Committees of Directors

The Board of Directors may by resolution create one or more committees and appoint members of the Board of Directors to serve on the committees at the pleasure of the Board of Directors. To the extent specified in a resolution adopted by the Board of Directors, each committee may exercise the full authority of the Board of Directors, except as limited by Section 141 (or any successor section) of the Delaware General Corporation Law. All provisions of the Delaware General Corporation Law and these Bylaws relating to meetings, action without meetings, notice (and waiver thereof), and quorum and voting requirements of the Board of Directors apply, as well, to such committees and their members.

3.8. Compensation of Directors

The Board of Directors shall have the authority to fix the compensation of directors. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

4. OFFICERS

4.1. Positions

The officers of the Corporation shall be a President, a Secretary and a Treasurer, and such other officers as the Board of Directors (or an officer authorized by the Board of Directors) from time to time may appoint, including a Chairperson, one or more Vice Chairs, Executive Vice Presidents, Vice Presidents, Assistant Secretaries and Assistant Treasurers. Each such officer shall exercise such powers and perform such duties as shall be set forth below and such other powers and duties as from time to time may be specified by the Board of Directors or by any officer(s) authorized by the Board of Directors to prescribe the duties of such other officers. Any number of offices may be held by the same person, except that in no event shall the President and the Secretary be the same person. Each of the Chairperson (if any), President, and/or any Vice President may execute bonds, mortgages and other documents under the seal of the Corporation, except where required or permitted by law to be otherwise executed and except where the execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation.

4.2. Chairperson

The Board of Directors may appoint a person to serve as its Chairperson to preside (when present) at all meetings of the Board of Directors and stockholders and ensure that all orders and resolutions of the Board of Directors and stockholders are carried into effect. The Chairperson shall possess the same authority as the President to execute bonds, mortgages and other contracts, under the seal of the Corporation, if required, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall expressly delegated by the Board of Directors to some other officer or agent of the Corporation.

4.3. President

The President shall be the chief executive officer of the Corporation and shall have full responsibility and authority for management of the day-to-day operations of the Corporation, subject to the authority of the Board of Directors. The President may execute bonds, mortgages and other contracts, under the seal of the Corporation, if required, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation.

4.4. Vice President

In the absence of the President or in the event of the President’s inability or refusal to act, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President.

4.5. Secretary

The Secretary shall have responsibility for preparation of minutes of meetings of the Board of Directors and of the stockholders and for authenticating records of the Corporation. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors. The Secretary or an Assistant Secretary may also attest all instruments signed by any other officer of the Corporation.

4.6. Assistant Secretary

The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors (or if there shall have been no such determination, then in the order of their election), shall, in the absence of the Secretary or in the event of the Secretary’s inability or refusal to act, perform the duties and exercise the powers of the Secretary.

4.7. Treasurer

The Treasurer shall be the chief financial officer of the Corporation and shall have responsibility for the custody of the corporate funds and securities and shall see to it that full and accurate accounts of receipts and disbursements are kept in books belonging to the Corporation. The Treasurer shall render to the Chairperson, the President, and the Board of Directors, upon request, an account of all financial transactions and of the financial condition of the Corporation.

4.8. Assistant Treasurer

The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors (or if there shall have been no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of the Treasurer’s inability or refusal to act, perform the duties and exercise the powers of the Treasurer.

4.9. Term of Office

The officers of the Corporation shall hold office until their successors are chosen and qualify or until their earlier resignation or removal. Any officer may resign at any time upon written notice to the Corporation. Any officer elected or appointed by the Board of Directors may be removed at any time, with or without cause, by the affirmative vote of a majority of the Board of Directors.

4.10. Compensation

The compensation of officers of the Corporation shall be fixed by the Board of Directors or by any officer(s) authorized by the Board of Directors to prescribe the compensation of such other officers.

4.11. Fidelity Bonds

The Corporation may secure the fidelity of any or all of its officers or agents by bond or otherwise.

5. CAPITAL STOCK

5.1. Certificates of Stock; Uncertificated Shares

The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution that some or all of any or all classes or series of the Corporation’s stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates, and upon request every holder of uncertificated shares, shall be entitled to have a certificate (representing the number of shares registered in certificate form) signed in the name of the Corporation by the Chairperson, President or any Vice President, and by the Treasurer, Secretary or any Assistant Treasurer or Assistant Secretary of the Corporation. Any or all the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar whose signature or facsimile signature appears on a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

5.2. Lost Certificates

The Board of Directors, Chairperson, President or Secretary may direct a new certificate of stock to be issued in place of any certificate theretofore issued by

the Corporation and alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming that the certificate of stock has been lost, stolen or destroyed. When authorizing such issuance of a new certificate, the board or any such officer may, as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or such owner’s legal representative, to advertise the same in such manner as the board or such officer shall require and/or to give the Corporation a bond, in such sum as the board or such officer may direct, as indemnity against any claim that may be made against the Corporation on account of the certificate alleged to have been lost, stolen or destroyed or on account of the issuance of such new certificate or uncertificated shares.

5.3. Record Date

5.3.1. Actions by Stockholders

In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders (or to take any other action), the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and shall not be less than ten nor more than sixty days before the meeting or action requiring a determination of stockholders.

In order that the Corporation may determine the stockholders entitled to consent to corporate action without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, unless the Board of Directors fixes a new record date.

If no record date is fixed by the Board of Directors, the record date shall be at the close of business on the day next preceding the day on which notice is given, or if notice is not required or is waived, at the close of business on the day next preceding the day on which the meeting is held or such other action is taken, except that (if no record date is established by the Board of Directors) the record date for determining stockholders entitled to consent to corporate action without a meeting is the first date on which a stockholder delivers a signed written consent to the Corporation for inclusion in the minute book.

5.3.2. Payments

In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

5.4. Stockholders of Record

The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, to receive notifications, to vote as such owner, and to exercise all the rights and powers of an owner. The Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise may be provided by the Delaware General Corporation Law.

6. INSURANCE

The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation (or is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise) against liability asserted against or incurred by such person in such capacity or arising from such person’s status as such (whether or not the Corporation would have the power to indemnify such person against the same liability).

7. GENERAL PROVISIONS

7.1. Inspection of Books and Records

Any stockholder, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation’s stock ledger, a list of its stockholders, and its other books and records, and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to

such person’s interest as a stockholder. In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office or at its principal place of business.

7.2. Dividends

The Board of Directors may declare dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation and the laws of the State of Delaware.

7.3. Reserves

The directors of the Corporation may set apart, out of the funds of the Corporation available for dividends, a reserve or reserves for any proper purpose and may abolish any such reserve.

7.4. Execution of Instruments

All checks, drafts or other orders for the payment of money, and promissory notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

7.5. Fiscal Year

The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

7.6. Seal

The corporate seal shall be in such form as the Board of Directors shall approve. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced.

* * * * *

The foregoing Bylaws were adopted by the Board of Directors on November 20, 1996.

	/s/ Michael G. Ryan
	Secretary

EX-3.5 9 a2155511zex-3_5.htm EXHIBIT 3.5

Exhibit 3.5

	STATE OF DELAWARE
	SECRETARY OF STATE
	DIVISION OF CORPORATIONS
	FILED 09:00 AM 11/21/1996
	960340665 - 2686543

CERTIFICATE OF LIMITED PARTNERSHIP

AMERICAN ENTERPRISES MPT HOLDINGS, L.P.

The undersigned, desiring to form a limited partnership pursuant to the Delaware Revised Uniform Limited Partnership Act, 6 Delaware Code, Chapter 17, hereby certifies as follows.

FIRST: The name of the limited partnership is American Enterprises MPT Holdings, L.P.

SECOND: The name and address of the Registered Agent is Corporation Service Company, 1013 Centre Road, Wilmington, Delaware 19805.

THIRD: The name and mailing address of the sole general partner is as follows:

Capital Yield Corp.

9211 Forest Hill Avenue, Suite 109

Richmond, Virginia 23235

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Limited Partnership of American Enterprises MPT Holdings, L.P. as of November 20, 1996.

Capital Yield Corp.
General Partner


By:	/s/ Michael G. Ryan
Name:			Michael G. Ryan
Title:		President

	State of Delaware
	Secretary of State
	Division of Corporations
	Delivered 08:25 AM 05/30/2003
	FILED 08:30 AM 05/30/2003
	SRV 030355423 – 2686543 FILE

CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF LIMITED PARTNERSHIP
OF
AMERICAN ENTERPRISES MPT HOLDINGS, L.P.

Pursuant to Section 17-202 of the Delaware Revised Uniform Limited Partnership Act, the undersigned, the sole general partner of American Enterprises MPT Holdings, L.P. (hereinafter the “Limited Partnership”), organized and existing under and by virtue of the Delaware Revised Uniform Limited Partnership Act, does hereby certify as follows:

FIRST: The name of the limited partnership is American Enterprises MPT Holdings, L.P.

SECOND: The Certificate of Limited Partnership is amended by striking Article Third in its entirety and inserting the following new Article Third in its place:

“THIRD: The name and mailing address of the sole general partner is as follows:

CLFX Corporation

8730 Stony Point Parkway
Suite 150

Richmond, Virginia 23235”

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the General Partner, has executed this Certificate of Amendment to the Certificate of Limited Partnership on this 30th day of May, 2003.

	American Enterprises MPT Holdings, L.P.
	By CLFX Corporation, its General Partner


	By:	/s/Douglas Barnett
		Douglas Barnett
		Senior Vice President, Chief Financial Officer and Treasurer

	State of Delaware
	Secretary of State
	Division of Corporations
	Delivered 11:05 AM 11/30/2004
	FILED 10:44 AM 11/30/2004
	SRV 040856678 – 2686543 FILE

CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF LIMITED PARTNERSHIP
OF
AMERICAN ENTERPRISES MPT HOLDINGS, L.P.

Pursuant to Section 17-202 of the Delaware Revised Uniform Limited Partnership Act, the undersigned, the sole general partner of American Enterprises MPT Holdings, L.P. (hereinafter the “Limited Partnership”), organized and existing under and by virtue of the Delaware Revised Uniform Limited Partnership Act, does hereby certify as follows:

FIRST: The name of the limited partnership is American Enterprises MPT Holdings, L.P.

SECOND: The Certificate of Limited Partnership is amended by striking Article Third in its entirety and inserting the following new Article Third in its place:

“THIRD: The name and mailing address of the solegeneral partner is as follows:

Power Transmission Holding LLC
8780 Stony Point Parkway
Suite 150
Richmond, Virginia 23235”

[Signature Page Follows]

AMERICAN ENTERPRISES MPT HOLDINGS, L.P.

By Power Transmission Holding LLC,
its General Partner


	By:	/s/ THOMAS M. O’BRIEN
		Thomas M. O’Brien
		Senior Vice President, General Counsel
		and Secretary

EX-3.6 10 a2155511zex-3_6.htm EXHIBIT 3.6

Exhibit 3.6

AGREEMENT OF LIMITED PARTNERSHIP OF

AMERICAN ENTERPRISES MPT HOLDINGS, L.P.

THIS AGREEMENT OF LIMITED PARTNERSHIP, dated as of December 9, 1996 (the “Agreement”), is entered into by and between Capital Yield Corp., a Delaware corporation (the “General Partner”) and the individuals who are executing this Agreement as Limited Partners (such persons and anyone who in the future may be admitted to the Partnership as a limited partner in accordance with this Agreement are hereafter referred to collectively as the “Limited Partners” and individually each as a “Limited Partner”).

WITNESSETH:

WHEREAS, a Certificate of Formation (the “Certificate”) to form the Partnership has been filed with the Secretary of State of the State of Delaware; and

WHEREAS, the General Partner and the Limited Partners desire to enter into this Agreement to continue the existence of the Partnership and to set forth their agreement as to their rights and obligations with respect to the Partnership;

NOW, THEREFORE, in consideration of the mutual promises herein set forth, the parties hereby agree as follows:

ARTICLE I
DEFINITIONS; FORMALITIES

1.01. Definitions.

“Act” means the Delaware Revised Uniform Limited Partnership Act, as amended.

“Additional Capital Contributions” means the amount of any additional capital contributions made by a Partner pursuant to Section 3.01(b) hereof.

“Agreement” means this Agreement of Limited Partnership, as originally executed and as hereafter amended or modified from time to time.

“Capital Account” means the capital account determined and maintained for each Partner in the manner provided for in the Tax Allocations Addendum.

“Capital Contribution” or “Capital Contributions” means the Initial Capital Contribution and any Additional Capital Contributions made by a Partner pursuant to Section 3.01 hereof.

“Capital Priority Amount” means, with respect to each Partner, an amount equal to the sum of (i) the Partner’s Net Invested Capital plus (ii) the Partner’s Unrecovered Partner Priority Return at the time of determination.

“Cash Available for Distribution” means, with respect to any fiscal period, an amount, determined by the General Partner in its sole and absolute discretion, equal to the cash revenues of the Partnership from all sources (including without limitation any net proceeds received by the Partnership upon the sale or other disposition of Partnership assets other than in the ordinary course of the Partnership’s business, the net proceeds from any refinancing or borrowing by the Partnership, and interest income on Partnership working capital) during such fiscal period plus such reserves that the General Partner determines are no longer necessary to provide for the foreseeable needs of the Partnership, less (i) all cash expenditures of the Partnership during such fiscal period, including, without limitation, operating expenses, debt service, repayment of Partner Advances and interest thereon (which shall be repaid in full prior to any distribution of Cash Available for Distribution), administrative expenses, and expenditures incurred by the Partnership in connection with capital transactions, and (ii) such reserves that the General Partner determines to be necessary or appropriate to provide for the foreseeable needs of the Partnership.

“Certificate of Limited Partnership” means the Certificate of Limited Partnership, and any and all amendments thereto, filed on behalf of the Partnership with the Secretary of State of the State of Delaware as required under the Act.

“Code” means the Internal Revenue Code of 1986, as amended (or any corresponding provision or provisions of succeeding law).

“Estimated Market Value” means the estimated fair market value of the Partnership’s interest in the Operating Partnership as determined by the General Partner taking into account, among other relevant criteria, industry-standard valuation procedures, capitalized earnings and cash flow of the Operating Partnership, sales of comparable companies and such other factors as the General Partner, in its sole and absolute discretion, determines are appropriate, including, without limitation, market conditions at the time the

Estimated Market Value is to be determined and any discount appropriate for the valuation of such an interest.

“Fiscal Year” means the fiscal year of the Partnership, which initially shall end on December 31 of each year.

“General Partner” means Capital Yield Corp., a Delaware corporation, in its capacity as general partner of the Partnership and its permitted successors or assigns or any Person admitted as a substitute general partner pursuant to this Agreement.

“Initial Capital Contribution” means the amount of the capital contribution made by a Partner as described in Section 3.01(a).

“Limited Partners” means the Persons who execute this Agreement as Limited Partners as of the date hereof and any Person subsequently admitted as a substituted or additional Limited Partner pursuant to this Agreement (including any Limited Partner who becomes a Withdrawn Limited Partner pursuant to Section 5.02(b)). Reference to a “Limited Partner” means one of the Limited Partners.

“Majority” means Limited Partners other than Withdrawn Limited Partners, if any, with a majority of the Percentage Interests held by the Limited Partners, excluding any Partnership Interests held by any Withdrawn Limited Partners.

“Management Limited Partner” means a Limited Partner who is executing a signature page to this Agreement as a Management Limited Partner as of the date hereof or who later acquires an interest in the Partnership as a Management Limited Partner in accordance with the terms of this Agreement.

“Net Invested Capital” means, as to each Partner, the amount of such Partner’s Initial Capital Contributions, increased by the amount of any Additional Capital Contributions made by such Partner after the date of this Agreement pursuant to Section 3.01(b), and reduced, as and when made, by the amount of cumulative distributions to such Partner pursuant to Section 3.04(a)(i) which, pursuant to Section 3.04(b), are applied to reduce such Partner’s Net Invested Capital.

“Net Profits” or “Net Losses” means, with respect to a fiscal period, the net profits or net losses of the Partnership for Federal income tax purposes during such period as determined under section 702 of the Code.

“Operating Partnership” means American Enterprises MPT, L.P., a Delaware limited partnership, and any successor entity.

“Partners” means the General Partner and the Limited Partners. Reference to a “Partner” means any one of the Partners.

“Partner Advances” means loans or advances, if any, made by a Partner to the Partnership from time to time pursuant to Section 3.01(b).

“Partner Priority Return” means an amount, computed as of the end of each calendar month with respect to each Partner, equal to the product of (i) the quotient of the Prime Rate in effect for such month plus one-quarter of one percentage point divided by twelve (12), multiplied by (ii) the sum of (A) the average daily outstanding Net Invested Capital of the Partner during such month plus (B) the average daily outstanding Unrecovered Partner Priority Return for such Partner during such month. To the extent that the Partner Priority Return is not paid to a Partner with respect to any month, such unpaid Partner Priority Return shall be added to the Unrecovered Partner Priority Return and shall itself be subject to the Partner Priority Return thereafter. The Partner Priority Return shall begin to accrue with respect to a Partner as of the first calendar month in which the Partner makes Capital Contributions to the Partnership.

“Partnership” means the limited partnership formed under the Act by this Agreement by the parties hereto, as said Partnership may from time to time be constituted.

“Partnership Interest” means the entire interest of a Partner in the Partnership at any particular time, including the right of such Partner to any and all rights and benefits to which a Partner may be entitled as provided in this Agreement, together with the obligations of such Partner to comply with all the terms and provisions of this Agreement.

“Percentage Interest” means the percentage ownership interest of a Partner determined in accordance with this Agreement.

“Person” means any individual, partnership, corporation, trust, or other legal entity.

“Prime Rate” means for any period the daily average of the “base rate” for corporate loans at NationsBank, N.A. or such other large U.S. money center banks as shall be designated from time to time by the General Partner.

“Prior Profit Amount” means the amount computed by the General Partner, in its sole and absolute discretion, each time that one or more new Partners are to be admitted to the Partnership pursuant to Section 4.01(c) or the Partnership Interest of a Management Limited Partner is converted to that

of a Withdrawn Limited Partner in accordance with Section 5.02(b), that a Partner would receive under Sections 3.04(a)(iii) and 3.04(a)(iv) if the Partnership were to sell all of its assets for cash equal to the Estimated Market Value as of the Valuation Date with respect to such admission or conversion and were to distribute the estimated net proceeds of such deemed sale, after payment of all Partnership liabilities and the allocation of any Net Profit or Net Loss of the Partnership for the fiscal year of such deemed sale (including for this purpose the estimated gain or loss that the Partnership would realize on the deemed sale), to the Partners (other than the new Partners then being admitted) pursuant to Section 3.04(a). In the event new Partners are admitted to the Partnership or the Partnership Interests of Management Limited Partners are so converted on more than one date, Prior Profit Amounts shall be calculated and credited to the Partners for each such admission or conversion, so that any appreciation in the Estimated Market Value of the Partnership during the period between Valuation Dates will be credited solely to those Persons who are Partners during such period. The General Partner shall be authorized and directed to make such adjustments to the computation of Prior Profit Amounts and the manner in which distributions and allocations are made to the Partners with respect to such Prior Profit Amounts as the General Partner determines are necessary or appropriate to insure that any appreciation in the Estimated Market Value of the Partnership is properly credited to those persons who are Partners (other than as Withdrawn Limited Partners) during the period in which such appreciation occurs.

“Subscription Agreement” means the Subscription Agreement being executed and delivered to the Partnership by each initial Limited Partner, other than Mitchell and Steven Rales, in connection with his or her acquisition of a Partnership Interest.

“Tax Allocations Addendum” means Exhibit A to this Agreement as it may be amended from time to time in accordance with Section 3.07.

“Tax Matters Partner” means the General Partner.

“Unrecovered Partner Priority Return” means, with respect to each Partner, such Partner’s cumulative Partner Priority Return reduced, as and when made, by the amount of all previous distributions made to the Partner pursuant to Section 3.04(a)(i), which pursuant to Section 3.04(b) were applied to reduce such Partner’s Unrecovered Partner Priority Return.

“Undistributed Prior Profit Amount” means, with respect to each Partner, the Prior Profit Amount credited to such Partner pursuant to Section 4.01(c) reduced, as and when made, by the amount of all distributions to the Partner pursuant to Section 3.04(a)(ii) with respect to such Prior Profit Amount. In the event new Partners are admitted or Management Limited

Partners become Withdrawn Limited Partners on more than one date and as a result there are Prior Profit Amounts credited to the Partners with respect to more than one Valuation Date, the Partnership shall separately account for the Undistributed Prior Profit Amounts with respect to each such Prior Profit Amount.

“Valuation Date” means (i) the date immediately prior to the date of the admission of one or more new Partners pursuant to Section 4.01(c), or (ii) the effective date on which a Management Limited Partner becomes a Withdrawn Limited Partner in accordance with Section 5.02(b).

“Withdrawn Limited Partner” means any Management Limited Partner whose Partnership Interest has been converted into that of a Withdrawn Limited Partner pursuant to Section 5.02(b).

1.02. Continuation of Partnership; Certificate of Limited Partnership. The General Partner formed the Partnership on November 21, 1996, pursuant to the provisions of the Act. The Partners hereby execute this Agreement for the purpose of continuing the existence of the Partnership and setting forth the rights, duties and relationship of the Partners. If the laws of any jurisdiction in which the Partnership transacts business so require, the General Partner also shall file, with the appropriate office in that jurisdiction, a copy of the Certificate of Limited Partnership as filed with the office of the Secretary of State of the State of Delaware or any other documents necessary for the Partnership to qualify to transact business and to establish and maintain the Limited Partners’ limited liability under the Act. The Partners further agree and obligate themselves to execute, acknowledge, and cause to be filed for record, in the place or places and manner prescribed by law, any amendments to the Certificate of Limited Partnership as may be required, either by the Act, by the laws of a jurisdiction in which the Partnership transacts business, or by this Agreement, to reflect changes in the information contained therein or otherwise to comply with the requirements of law for the continuation, preservation, and operation of the Partnership as a limited partnership under the Act.

1.03. Name. The name of the Partnership is American Enterprises MPT Holdings, L.P..

1.04. Names of Partners. The names of the partners of the Partnership as of the date of this Agreement are set forth on the signature pages of this Agreement.

1.05. Principal Place of Business. The principal place of business and the principal office of the Partnership shall be located at 9211 Forest Hill Avenue, Suite 109, Richmond, Virginia 23235. The Partnership may have such

other or additional offices, either within or without the State of Delaware, as the General Partner shall deem advisable.

1.06. Registered Agent The name and address of the initial registered agent of the Partnership shall be Corporation Service Company, 1013 Centre Road, Wilmington, Delaware 19805. The General Partner may change the registered agent from time to time, in its sole and absolute discretion.

1.07. Term. The term of the Partnership commenced on October 15, 1996 and shall continue until the Partnership is dissolved in accordance with the provisions of this Agreement.

1.08. Title to Partnership Property. Legal title to the property of the Partnership shall be in the name of the Partnership.

ARTICLE II
BUSINESS OF THE PARTNERSHIP

2.01. Purposes. The purposes for which the Partnership is formed and the businesses to be carried on and promoted by it are:

(a) to invest in, and acquire, hold, deal with and dispose of an interest in, the Operating Partnership, including without limitation exercising any rights of a limited partner in the Operating Partnership; and

(b) to engage in any one or more businesses or transactions, or to acquire all or any portion of any entity engaged in any one or more businesses or transactions which the General Partner, in its sole and absolute discretion, may from time to time authorize or approve, whether or not related to the business described in Section 2.01(a) or to any other business then engaged in by the Partnership.

2.02. Authority. In order to carry out its purposes, the Partnership is empowered and authorized to do any and all acts and things necessary, appropriate, proper, advisable, desirable, incidental to or convenient for the furtherance and accomplishment of its purpose and for the protection and benefit of the Partnership, including but not limited to the following:

(a) buy, own, operate, assign, mortgage, or lease any property;

(b) enter into any kind of activity, and perform and carry out contracts of any kind necessary to, in connection with, incidental to, or desirable to, the accomplishment of the purposes of the Partnership;

(c) borrow money and issue evidences of indebtedness in furtherance of the Partnership business and secure any such indebtedness by mortgage, pledge, or other lien; and

(d) do any and all other acts and things necessary or desirable in furtherance of the Partnership’s business.

ARTICLE III
CAPITAL CONTRIBUTIONS,
PERCENTAGE INTERESTS,
DISTRIBUTIONS AND ALLOCATIONS

3.01. Capital Contributions; Advances.

(a) Each Limited Partner shall make an Initial Capital Contribution to the Partnership in the amount set forth in its Subscription Agreement. The General Partner shall make an Initial Capital Contribution to the Partnership in an amount equal to 1.01% of the aggregate Initial Capital Contributions of the Limited Partners.

(b) In the event the Partnership requires funds in excess of the Partners’ Initial Capital Contributions, the General Partner, in its sole discretion, from time to time may request (but may not require) the Partners to make Additional Capital Contributions to the Partnership, subject to the following sentence; provided, however, that the General Partner shall be required to make Additional Capital Contributions such that the total amount of its Capital Contributions to the Partnership at all times shall be equal to at least 1.01% of the aggregate amount of Capital Contributions made to the Partnership by the Limited Partners. Unless otherwise agreed by all Partners other than any Withdrawn Limited Partners, all Partners other than any Withdrawn Limited Partners shall be offered the opportunity (but shall have no obligation) to make their pro rata shares of such Additional Capital Contributions in proportion to their respective Percentage Interests at the time. In the event one or more of such Partners elect not to make all of the Additional Capital Contribution that it is eligible to make, the other Partners (other than any Withdrawn Limited Partners) may elect to contribute such amounts. The Partners’ Percentage Interests shall not be adjusted as a result of any Additional Capital Contributions. In the event the General Partner, in its sole and absolute discretion, determines it would be more appropriate to obtain all or any portion of the funds needed by the Partnership in the form of loans from one or more of the Partners, the General Partner may request one or more of the Partners to loan or advance such funds to the Partnership, with interest on such loans or advances to be at the Prime Rate plus one-quarter of one percentage point (“Partner

Advances”). It is expressly understood and agreed that the General Partner may permit one or more Partners to make Partner Advances without also offering the other Partners an opportunity to make Partner Advances, and the Partners shall have no right to make any Partner Advances on a proportionate or other basis except as determined by the General Partner, in its sole discretion.

(c) Except as provided in Section 5.02(c), no Partner shall have the right to demand the return of its Capital Contributions or Net Invested Capital prior to the dissolution and liquidation of the Partnership.

3.02. Percentage Interests. The Percentage Interest of the General Partner at all times shall be one percent (1.00%). The Percentage Interests of the Limited Partners as of the date of this Agreement are set forth in their respective Subscription Agreements. The Percentage Interests of the Limited Partners shall be adjusted from time to time to reflect the admission of any new Partners to the Partnership pursuant to Section 4.01(c), the withdrawal of any Partner, or the conversion of the Partnership Interest of a Management Limited Partner to that of a Withdrawn Limited Partner pursuant to Section 5.02(b), and the Partners hereby consent to any such adjustment.

3.03. Capital Accounts. The Partnership shall keep a separate Capital Account for each Partner which shall be determined and maintained in the manner provided for in the Tax Allocations Addendum attached hereto as Exhibit A.

3.04. Distributions.

(a) The Partnership shall make distributions to the Partners of any Cash Available for Distribution from time to time as determined by the General Partner, in its sole and absolute discretion. Any such distributions, and any distributions to be made to the Partners in connection with the liquidation of the Partnership, shall be made in accordance with the following priorities:

(i) first, in the event the Capital Priority Amounts with respect to any Partners are greater than zero, to such Partners to the extent of and in proportion to their respective Capital Priority Amounts, until such amounts are reduced to zero;

(ii) second, in the event the Undistributed Prior Profit Amounts with respect to any Partners are greater than zero, to such Partners to the extent of and in proportion to their respective Undistributed Prior Profit Amounts, until such amounts are reduced to zero; provided, however, that if there are Undistributed Prior Profit Amounts attributable to more than one Valuation Date and the

amount to be distributed hereunder is less than the aggregate Undistributed Prior Profit Amounts, then the distribution hereunder shall be made in the order that such Undistributed Prior Profit Amounts arose, so that the Undistributed Prior Profit Amounts from the earliest Valuation Date shall be reduced to zero before distributions are made with respect to Undistributed Prior Profit Amounts attributable to subsequent Valuation Dates, and so on;

(iii) third, to the Partners, to the extent of and in proportion to the remaining positive balances in their Capital Accounts; and

(iv) thereafter, to the Partners other than any Withdrawn Limited Partners, pro rata in proportion to their respective Percentage Interests.

Notwithstanding the foregoing provisions of this Section 3.04(a), the General Partner shall cause the Partnership to distribute to each Partner, without regard to the priorities set forth above, an amount of the Partnership’s Cash Available for Distribution (to the extent thereof) equal to the product of (x) forty percent (40%) multiplied by (y) the Partnership’s estimated net taxable income allocable to such Partner for such period, as determined by the General Partner in consultation with the accountants who prepare the Partnership’s federal partnership information return (Form 1065) for such period, in proportion to the estimated amount of such net taxable income allocable to each Partner, and the amount so distributed to each Partner (the “Tax Distribution Amount”) shall be treated as having been received pursuant to the appropriate provisions set forth above for all purposes of this Agreement, including the determination of the Partner’s Capital Priority Amount, and Undistributed Prior Profit Amounts, as the case may be. In the event any distributions are made pursuant to the preceding sentence and, as a result, any Partners receive distributions in amounts less than the amounts they would have received without giving effect to the preceding sentence, then distributions for subsequent periods pursuant to this Section 3.04(a) shall be made on a priority basis so as to cause such Partners to receive, as quickly as possible, the amount of distributions they would have received had the distributions required by the preceding sentence not occurred, subject always to the requirements under the preceding sentence with respect to the distribution of Tax Distribution Amounts for such subsequent periods.

(b) Any amount distributed pursuant to Section 3.04(a)(i) (or deemed distributed pursuant to such section) shall be applied first to reduce each Partner’s outstanding Unrecovered Partner Priority Return and after each Partner’s Unrecovered Partner Priority Return is reduced to zero, then to reduce each Partner’s Net Invested Capital.

3.05. Allocation of Profits and Losses.

(a) Subject to Section 4 of the Tax Allocations Addendum, Net Profits shall be allocated with respect to any Fiscal Year in the following order of priority:

(i) first, to all Partners whose Capital Accounts have negative balances, in the ratio of such negative balances until such negative balances are brought to zero;

(ii) second, to the Partners to the extent of, and in proportion to, the amounts necessary to bring the Capital Account balance of each Partner to an amount equal to such Partner’s Capital Priority Amount (prior to giving effect to any distributions made or to be made pursuant to Section 3.04(a)(i) with respect to such Fiscal Year);

(iii) third, to the Partners to the extent of, and in proportion to, the amounts necessary to bring the Capital Account balance of each Partner to an amount equal to the sum of (A) such Partner’s Capital Priority Amount plus (B) such Partner’s Undistributed Prior Profit Amount (prior to giving effect to any distributions made or to be made pursuant to Section 3.04(a)(i) or Section 3.04(a)(ii) with respect to such Fiscal Year); and

(iv) thereafter, any remaining Net Profits and gain shall be allocated to the Partners other than any Withdrawn Limited Partners first, so as to cause, as quickly as possible, any positive balances in the Partners’ Capital Accounts in excess of the sum of (A) their respective Capital Priority Amounts plus (B) their respective Undistributed Prior Profit Amounts (prior to giving effect to any distributions made or to be made pursuant to Section 3.04(a)(i) or Section 3.04(a)(ii) with respect to such Fiscal Year) to bear the same ratio to each other as the ratio of their respective Percentage Interests bear to each other and second, in proportion to their respective Percentage Interests.

(b) Subject to Section 4 of the Tax Allocations Addendum, any Net Losses shall be allocated to the Partners as follows:

(i) first, to the Partners with Capital Account balances in excess of the sum of (A) their respective Capital Priority Amounts plus (B) their respective Undistributed Prior Profit Amounts, to the extent of and in proportion to such excess amounts until such excess amounts have been eliminated;

(ii) second, to the Partners with Capital Account balances in excess of their respective Capital Priority Amounts, to the extent of and in proportion to such excess amounts until such excess amounts have been eliminated;

(iii) third, to the Partners (if any) with remaining positive Capital Account balances, to the extent of and in proportion to the amount of such balances until such balances have been reduced to zero; and

(iv) thereafter, to the Partners, in proportion to their respective Percentage Interests.

3.06. Partnership Funds. All funds of the Partnership shall be deposited in such bank accounts as shall be designated by the General Partner and all withdrawals from such bank accounts shall be made by checks or other instruments signed by the designated representatives of the General Partner or such other Person or Persons as the General Partner may designate.

3.07. Tax Matters.

(a) The General Partner shall be the “Tax Matters Partner” for purposes of Code sections 6221 through 6232, inclusive. As the Tax Matters Partner, the General Partner shall prepare and file all required income tax returns and shall manage administrative tax proceedings conducted at the Partnership level by the Internal Revenue Service with respect to Partnership matters.

(b) The Tax Allocations Addendum shall set forth in detail the policies and procedures which shall guide the tax accounting of the Partnership. Such policies and procedures shall be in accordance with all then-applicable provisions of the Code and the Treasury Department regulations thereunder, including without limitation the provisions thereof governing allocation of gains and losses; provided, however, that such allocations (the “Regulatory Allocations”) shall be taken into account in allocating other profits, losses, and items of income, gain, loss and deduction among the Partners so that, to the extent possible, the net amount of such allocations of other profits, losses and other items and the Regulatory Allocations to each Partner shall be equal to the net amount that would have been allocated to each such Partner if the Regulatory Allocations had not occurred. The General Partner shall have the authority to amend the Tax Allocations Addendum from time to time as it deems necessary, in its sole and absolute discretion.

ARTICLE IV
RIGHTS, OBLIGATIONS, AND POWERS OF
THE PARTNERS

4.01. Authority of the General Partner.

(a) The General Partner, in its capacity as general partner, shall have the right, power and authority, acting for and on behalf of the Partnership, inter alia, to take all actions and execute and deliver all agreements on behalf of the Partnership in connection with the business of the Partnership, including, without limitation, the authority to cause the Partnership to sell, exchange, lease, pledge, mortgage, or otherwise deal with all or any of its assets or to merge with or into any other entity (regardless of whether the Partnership is the surviving entity), as determined by the General Partner in its sole and absolute discretion. The General Partner also shall have the right, power and authority to execute and deliver on behalf of the Partnership any contract, agreement or other instrument or document required or otherwise appropriate to acquire, sell, operate or encumber the Partnership’s properties.

(b) All decisions made for and on behalf of the Partnership by the General Partner shall be binding upon the Partnership. Except as otherwise expressly set forth in this Agreement, the General Partner (acting for and on behalf of and in the name of the Partnership), in extension and not in limitation of the rights and powers given it by law or by the other provisions of this Agreement, shall, in its sole discretion, have the full and entire right, power and authority, in the management of the Partnership’s business, to do any and all acts and things necessary, proper, convenient or desirable to effectuate the purposes of the Partnership.

(c) The General Partner shall have the sole discretion and authority to admit to the Partnership one or more additional Limited Partners (who may be designated as Management Limited Partners, as the General Partner shall determine) and in connection therewith to determine the Percentage Interests of such additional Limited Partners following any such admission, without any further action or consent on the part of the other Partners being required. The Percentage Interests of Mitchell and Steven Rales (prior to the admission of the additional Limited Partners), but not the other Partners, shall be reduced by the amount of the Percentage Interests of the additional Limited Partners. The General Partner shall revise the Agreement and the other records of the Partnership as necessary to reflect the names, addresses, Percentage Interests, and Capital Contributions, if any, of such additional Limited Partners and the corresponding reduction of the Percentage Interests of Mitchell and Steven Rales, without any further action or consent on the part of the other Partners being required. In the event any additional Limited Partners are so admitted, the General Partner also shall determine the

Estimated Market Value of the Partnership on the Valuation Date with respect to the admission of such additional Partners and the amount (if any) of the Prior Profit Amount to be credited to each previously admitted Partner in connection with such admission.

4.02. Restrictions on General Partner’s Authority. Notwithstanding any other provision of this Agreement, including Section 4.01 and except as provided herein, the General Partner shall have no authority to do any of the following acts without obtaining the consent thereto of a Majority of the Limited Partners:

(i) to file a bankruptcy petition on behalf of the Partnership; or

(ii) to admit any general partner to the Partnership.

4.03. Management of Business. Except to the extent the consent of certain Limited Partners may be required under Section 4.02, management of the Partnership’s business shall in every respect be the full and exclusive responsibility of the General Partner, who shall have all rights, powers and authorities permitted by the Act and the laws of the State of Delaware. The General Partner shall have the right, power and authority to delegate any or all of its management duties to any other Person (including an affiliate of the General Partner) and to cause the Partnership to reasonably compensate any such Person for services rendered to or for the benefit of the Partnership, including a reasonable allowance for overhead expenses. No Limited Partner shall take part in the management or control of the business of the Partnership or transact any business in the name of the Partnership. No Limited Partner shall have the power or authority to bind the Partnership or to sign any agreement or document in the name of the Partnership.

4.04. Outside Activities. Except as may be otherwise limited or provided for in any other agreement between the Partnership and a Partner, the Partners may engage in and possess interests in other business ventures (including limited partnerships) of every kind and description whatsoever, including, without limitation, interests in other entities that may compete with the Partnership’s business. Neither the Partnership nor any of the Partners shall have any rights by virtue of this Agreement in or to such other business ventures or to the income or profits derived therefrom.

4.05. Action Prior to Agreement. Each and every act and action taken by the General Partner on behalf of the Partnership prior to the date hereof is hereby ratified and confirmed for all purposes and in all respects.

4.06. Partners or Affiliates Dealing with Partnership. Each of the Partners and any of their affiliates shall have the right to contract or otherwise deal with the Partnership.

4.07 Liability to Partnership and the Limited Partners. Except as provided in Section 5.01, the General Partner shall not be liable, responsible or accountable in damages, for the return of Capital Contributions or otherwise to the Limited Partners or to the Partnership for any acts performed in good faith and within the scope of this Agreement except to the extent that a court of competent jurisdiction finds, upon entry of a final judgment, that its actions and/or omissions are attributable to gross negligence, willful misconduct, recklessness, malfeasance or fraud.

4.08. Indemnification.

(a) The Partnership shall indemnify, defend and hold harmless the Partners, their stockholders, owners, directors, officers, employees and agents from and against any loss, liability, damage, cost or expense (including reasonable attorneys fees) arising out of or alleged to arise out of any demands, claims, suits, actions or proceedings against any of them in or as a result of or relating to their respective capacities, actions or omissions with respect to the Partnership, or otherwise concerning the business or affairs of the Partnership including, without limitation, any demands, claims, suits, actions or proceedings, initiated by any of the Partners; provided, however, that the acts or omissions of the General Partner shall not be indemnified thereunder to the extent a court of competent jurisdiction finds, upon entry of a final judgment, that the same resulted from gross negligence, willful misconduct, recklessness, malfeasance or fraud. Any indemnification under this Section 4.08 shall be made from the assets of the Partnership, and no Partner shall be personally liable therefor.

(b) The rights of indemnification contained in this Section 4.08 shall be cumulative of, and in addition to, any and all rights, remedies and recourse to which any indemnified party shall be entitled, whether pursuant to the provisions of this Agreement, at law or in equity. Indemnification shall be made solely and entirely from assets of the Partnership (excluding, for these purposes, all assets of the Partners other than those of and attributable to such Partner’s interest in the Partnership), and the Limited Partners shall not be personally liable to any indemnified party under this Section 4.08.

(c) Any Person, when entitled to indemnification pursuant to this Section 4.08, shall be entitled to receive, upon application therefor, advances to cover the costs of defending any proceeding. All rights to indemnification hereunder shall survive the dissolution of the Partnership and the death, retirement, incompetency, insolvency or bankruptcy of any Partner.

4.09. Transfers of Partnership Interests.

(a) No Person shall be admitted as an additional or substituted General Partner of the Partnership without the prior written consent of a Majority of the Limited Partners.

(b) No Person shall be admitted as an additional or substituted Limited Partner of the Partnership without the prior written consent of the General Partner, in its sole and absolute discretion.

(c) None of the Limited Partners shall mortgage, pledge, give, sell, assign or otherwise dispose of all or any part of its Partnership Interest without the prior written consent of the General Partner, in its sole and absolute discretion. Any attempt to assign or transfer a Partnership Interest in violation of this Section 4.09(c) shall be null and void.

(d) If a transferee or a legal representative of a Partner is not admitted as a substituted partner, neither such transferee nor legal representative shall have the right to participate in the management of the Partnership’s affairs.

(e) Any additional Limited Partner admitted to the Partnership and any assignee or transferee of any interest in the Partnership shall execute such documents and take such actions as are reasonably requested by the General Partner to demonstrate that the additional Limited Partner, assignee or transferee is bound by the terms of this Agreement. Without limitation of the foregoing, any additional Limited Partner or transferee or assignee shall execute this Agreement, as amended from time to time, and agree to be bound by all of its terms and provisions. Upon completion of the assignment or transfer, any assignee or transferee of a Partner’s Partnership Interest shall be liable for all indebtedness and obligations of the Partnership for which the assignor or transferor was liable and which arise or accrue after such assignment or transfer.

4.10. Limitation on Liability of Limited Partners. The liability of the Limited Partners shall be limited to their respective Capital Contributions. The Limited Partners shall have no other liability to contribute money to, or in respect of the liabilities or obligations of, the Partnership, nor shall any Limited Partner (or any of its partners) be personally liable for any obligations of the Partnership.

4.11. Power of Attorney Granted to the General Partner. Each of the Limited Partners hereby appoints and empowers the General Partner, its true and lawful attorney-in-fact in the Limited Partner’s name and behalf, to prepare any and every amendment to this Agreement and to sign, certify and acknowledge any and every such amendment to this Agreement (other than an

amendment to this Agreement relating to the admission or increased contribution of a Partner, in which case such new Partner, or such Partner whose contribution is to be increased, shall sign such amendment or execute a power of attorney to sign such amendment specifically describing such admission or increase), which power of attorney shall be deemed to be irrevocable and a power coupled with an interest, so long as the General Partner remains as general partner of the Partnership, and which power of attorney shall survive the assignment by any Limited Partner of the whole or any part of its Partnership Interest, where such an amendment is necessary to reflect:

(a) a change in the name of the Partnership;

(b) the admission of additional or substituted Limited Partners pursuant to the terms of this Agreement;

(d) the correction of any typographical error in this Agreement (or any amendment thereto).

Each Limited Partner further agrees that, upon the request of the General Partner, it will certify and acknowledge any such amendment and execute such further instruments as shall be necessary or appropriate to effect such amendments.

ARTICLE V
SPECIAL PROVISIONS FOR MANAGEMENT
AND WITHDRAWN LIMITED PARTNERS

5.01. Partnership Interest for Services to be Rendered. By executing a copy of this Agreement, each person admitted as a Management Limited Partner acknowledges and agrees that he or she is receiving his or her Partnership Interest in connection with his or her employment by the Partnership, the Operating Partnership, and/or one of their affiliates and in part as consideration for his or her agreement to render services to the Partnership, the Operating Partnership, and/or one of their affiliates. The Partnership Interest of each Management Limited Partner shall be subject to vesting, redemption, forfeiture, or conversion to that of a Withdrawn Limited Partner to the extent, and on the terms and conditions, provided in each Management Limited Partner’s Subscription Agreementnership Interest in the event such Management Limited Partner ceases to be employed by the Partnership, the Operating Partnership, or one of their affiliates. Nothing in this Agreement or the Subscription Agreement of a Management Limited Partner shall be construed to limit in any way the right of the Partnership, the Operating

Partnership, or one of their affiliates to terminate the employment of a Management Limited Partner at any time.

5.02. Effects of Redemption or Conversion

(a) In the event the Partnership redeems the Partnership Interest of a Management Limited Partner or such Partnership Interest is forfeited pursuant to the terms of the Management Limited Partner’s Subscription Agreement, the Percentage Interests and Capital Accounts of Mitchell and Steven Rales (but not the other Partners) shall be increased by the amount of the Management Limited Partner’s Percentage Interest and remaining Capital Account, and the General Partner shall amend this Agreement and the other records of the Partnership as necessary to reflect the redemption or forfeiture of such Management Limited Partner’s Partnership Interest and the resulting increases in such Percentage Interests and Capital Accounts.

(b) In the event the Partnership Interest of a Management Limited Partner is converted to that of a Withdrawn Limited Partner pursuant to the terms of the Management Limited Partner’s Subscription Agreement, the former Managment Limited Partner’s sole interest in the Partnership shall consist of the right to receive Partnership distributions pursuant to Section 3.04(a)(ii) up to the aggregate amount of his or her Prior Profit Amounts and allocations of Net Income and Net Loss to the extent provided in Section 3.05, and shall no longer have any of the rights of a Management Limited Partner under this Agreement. In the event any additional Partnership Interest is so converted, the General Partner shall determine the Estimated Market Value of the Partnership on the Valuation Date with respect to such conversion and the amount (if any) of the Prior Profit Amount to be credited to each Partner (including the Withdrawn Partner) as of such date.

5.03. Effects of Merger, Etc. In the event the Partnership is merged with or into any other entity or interests in the Partnership are otherwise exchanged for interests in another entity in a transaction in which the Partnership is not the surviving entity, the interests of the Partners in the resulting or surviving entity shall be allocated among the Partners in proportion to the amounts the Partners would receive if those interests were distributed in liquidation of the Partnership pursuant to Section 3.04. The General Partner is authorized to make such adjustments and arrangements with respect to the ownership of the interests in the resulting or surviving entity as the General Partner, in its reasonable discretion, deems necessary to properly reflect the economic interests of the Partners in the Partnership and to otherwise give effect to this Section 5.03.

ARTICLE VI
MISCELLANEOUS PROVISIONS

6.01. Termination.

(a) The Partnership shall terminate upon the occurrence of any one of the following events:

(i) the bankruptcy or insolvency of the Partnership;

(ii) the bankruptcy, insolvency or withdrawal of the General Partner;

(iii) the sale, disposition or abandonment of all or substantially all of the Partnership assets;

(iv) the determination of the General Partner and Limited Partners other than the Withdrawn Limited Partners, if any, representing at least two-thirds (2/3) of the Percentage Interests then held by Limited Partners, excluding any Partnership Interests held by the Withdrawn Limited Partners, if any, that the Partnership should be dissolved; or

(v) any act or event which causes the dissolution of the Partnership under the Act.

(b) Dissolution of the Partnership shall be effective on the day on which the event occurs giving rise to the dissolution, but the Partnership shall not terminate until the assets of the Partnership have been distributed as provided in Section 6.01(c). Notwithstanding the dissolution of the Partnership, prior to the termination of the Partnership, as aforesaid, the business of the Partnership shall continue to be governed by this Agreement.

(c) Upon the dissolution of the Partnership, the nonwithdrawing Partner that is not bankrupt or insolvent, if any, or if there are none, a liquidating trustee appointed in accordance with the Act to wind up the Partnership’s affairs, shall with diligence liquidate the assets of the Partnership. The net proceeds of the liquidation of the Partnership, together with all assets of the Partnership at the time of such liquidation, shall be applied and distributed according to the following priorities:

(i) to the payment of the expenses of liquidation and the debts and liabilities of the Partnership (other than any debts or liabilities of the Partnership to any of the Partners);

(ii) to the payment of any debts or liabilities of the Partnership to any of the Partners, provided that, if the amount available for such payment shall be insufficient, such payment shall be made pro rata in accordance with the respective amounts of such debts and liabilities;

(iii) to the creation of any reserves which the liquidating Partners or liquidating trustee, as the case may be, deem reasonably necessary for the payment of any contingent or unforeseen liabilities or obligations of the Partnership; and

(iv) to all Partners in the order of priority set forth in Section 3.04 above.

(d) All distributions with respect to the Partnership and all returns of Capital Contributions to each Partner shall be payable solely from the assets of the Partnership and no Partner shall have any recourse against any other Partner for such distributions or returns.

(e) Within a reasonable time following the completion of the liquidation of the Partnership’s properties, the General Partner shall supply to each of the Partners a financial statement which shall set forth the Partnership’s assets and liabilities and each Partner’s pro rata portion of the Partnership’s distributions.

(f) Upon the completion of the liquidation of the Partnership and the distribution of all Partnership funds, the Partnership shall terminate and the General Partner shall have the authority to execute and record any and all other documents required to effectuate the dissolution and termination of the Partnership.

6.02. Amendment. Except as otherwise expressly provided herein, this Agreement may be amended with the consent of the General Partner and Limited Partners whose Partnership Interests represent a majority of the Percentage Interests held by the Limited Partners; provided, however, that any amendment that is reasonably likely to have a material adverse effect on the amounts that any Limited Partner would be entitled to receive upon the liquidation of the Partnership shall require the consent of the General Partner and Limited Partners other than the Rales Partners whose Partnership Interests represent a majority of the Percentage Interests held by the Limited Partners other than the Rales Partners.

6.03. Records and Reports.

(a) The General Partner shall cause the Partnership to keep full and true books of account in which shall be entered fully and accurately the transactions of the Partnership. Such books of account shall be prepared on a basis selected by the General Partner. The fiscal year of the Partnership shall be the calendar year, unless otherwise determined by the General Partner (the “Fiscal Year”).

(b) Each Partner and its duly authorized representatives shall have the right, at such Partner’s expense and after reasonable prior notice to the General Partner, to visit the offices and properties of the Partnership and examine the books of account and any other records of the Partnership, in each case at such reasonable times during normal business hours and as reasonably often as such Partner may desire.

(c) As soon as reasonably practical, but in no event later than 180 days following the end of each Fiscal Year of the Partnership, the General Partner shall send to each Limited Partner such Partnership information as shall be reasonably necessary for the preparation by such Limited Partner of its Federal and state income tax returns.

6.04. Investment Intent. Each Partner represents that it has, and acknowledges that the Partnership has, complied with all applicable Federal and state securities laws in the formation of this Partnership. Each Partner hereby represents and warrants that such Partner is acquiring its Partnership Interest for its own account, and not with a view toward resale or other distribution of its Partnership Interest, that it is not participating, directly or indirectly, in any underwriting of a distribution or a transfer of such Partnership Interest, and that it is not acquiring the Partnership Interest for resale upon the occurrence or non-occurrence of some predetermined event. Each Partner further covenants and agrees that (in addition to complying with the other limitations and restrictions imposed under this Agreement) such Partner will not offer, sell, or otherwise transfer its Partnership Interest, unless such Partnership Interest is registered pursuant to the Securities Act of 1933, as amended, and any applicable state regulations governing sale and transfer of corporate securities, or unless the Partnership shall be entitled to rely upon an opinion of counsel satisfactory to the General Partner with respect to compliance with or establishment of an exemption to the above laws.

6.05. Miscellaneous.

(a) Each provision hereof is intended to be severable and the invalidity or illegality of any portion of this Agreement shall not affect the validity or legality of the remainder hereof.

(b) Subject to the restrictions on assignment and all other restrictions contained herein, the terms and provisions of this Agreement shall be binding upon, and inure to the benefit of, the successors and assigns of the respective Partners. This subsection shall not be construed as creating any right to assign any Partner’s Partnership Interest.

(c) The terms and provisions of this Agreement shall be construed under the laws of Delaware and the Act as now adopted or as it may be hereafter amended shall govern the interpretation of this Agreement.

(d) This Agreement (including Exhibit A hereto) and the Subscription Agreements constitute the entire agreement of the parties hereto with respect to the matters set forth herein and supersedes any prior understanding or agreement, oral or written, with respect thereto.

(e) This Agreement may be executed in multiple counterparts and as so executed shall constitute one Agreement, binding on all the parties thereto.

(f) No waiver of any provision of this Agreement shall be valid unless in writing and signed by the Person or party against whom charged.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

THE GENERAL PARTNER:

CAPITAL YIELD CORP.


By:		/s/ Michael G. Ryan
	Name:	Michael G. Ryan
	Title:	President

[Each Limited Partner is executing a separate signature page]

American Enterprises MPT Holdings, L.P.

First Amendment

Dated as of May 28, 2003

to the

Agreement of Limited Partnership

Dated as of December 9, 1996

FIRST AMENDMENT
TO THE
AGREEMENT OF LIMITED PARTNERSHIP
OF
AMERICAN ENTERPRISES MPT HOLDINGS, L.P.

This First Amendment to the Agreement of Limited Partnership (this “Amendment”) of American Enterprises MPT Holdings, L.P., a Delaware limited partnership (the “Partnership”), is entered into as of May 28, 2003, by and among Capital Yield Corp., a corporation organized under the laws of Delaware (“General Partner”) and American Enterprises MPT Corp., a corporation organized under the laws of Delaware (“MPT Corp.”).

WITNESSETH:

WHEREAS, General Partner and the limited partners entered into an Agreement of Limited Partnership (the “Partnership Agreement”) as of December 9, 1996;

WHEREAS, pursuant to that certain MPT Holdings Contribution Agreement, dated as of May 28, 2003, by and among MPT Corp., the Partnership, and the limited partners of the Partnership (the “Contribution Agreement”), MPT Corp. shall acquire a Limited Partner interest in the Partnership as set forth in the Contribution Agreement;

WHEREAS, pursuant to Section 4.09 of the Partnership Agreement, no Person shall be admitted as an additional or substituted Limited Partner of the Partnership without the prior written consent of the General Partner, in its sole and absolute discretion;

WHEREAS, pursuant to Section 4.09 of the Partnership Agreement, General Partner desires to amend the Partnership Agreement to provide for the addition of MPT Corp. as a Limited Partner of the Partnership; and

WHEREAS, capitalized terms not defined herein shall have the meaning ascribed to them in the Partnership Agreement.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge, the parties hereto, intending to be legally bound, hereby amend the Partnership Agreement as follows:

1. Upon the execution of this Amendment, the addition of MPT Corp. as a Limited Partner of the Partnership pursuant to the transactions contemplated by

the Contribution Agreement is hereby ratified and approved. As a consequence of this Amendment, MPT Corp. shall become a party to the Partnership Agreement.

2. This Amendment shall act as a counterpart signature to the Partnership Agreement.

3. This Amendment may be executed in multiple counterparts, each of which shall constitute an original but all of which shall constitute but one and the same instrument.

4. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflict of laws.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the undersigned have caused this First Amendment to the Agreement of Limited Partnership to be duly executed and delivered on their behalf, as of the day and year first above written.

AMERICAN ENTERPRISES MPT HOLDINGS, L.P.

By Capital Yield Corp., Its General Partner

By:	/s/ [ILLEGIBLE]
	Name:	[ILLEGIBLE]
	Title:	VP


AMERICAN ENTERPRISES MPT CORP.

By:	/s/ Douglas Barnett
	Douglas Barnett
	Senior Vice President, Chief Financial Officer and Treasurer

American Enterprises MPT Holdings, L.P.

First Amendment to the Agreement of Limited Partnership

American Enterprises MPT Holdings, L.P.

Second Amendment

Dated as of May 30, 2003

to the

Agreement of Limited Partnership

Dated as of December 9, 1996

SECOND AMENDMENT
TO THE
AGREEMENT OF LIMITED PARTNERSHIP
OF
AMERICAN ENTERPRISES MPT HOLDINGS, L.P.

This Second Amendment to the Agreement of Limited Partnership (this “Amendment”) of American Enterprises MPT Holdings, L.P., a Delaware limited partnership (the “Partnership”), is entered into as of May 30, 2003, by and among Capital Yield Corp., a corporation organized under the laws of Delaware (“CYC”), American Enterprises MPT Corp., a corporation organized under the laws of Delaware (“MPT Corp.”), and Warner Electric Group, Inc., a Delaware corporation (“Warner”).

WITNESSETH:

WHEREAS, CYC and the Limited Partners of the Partnership entered into an Agreement of Limited Partnership (the “Partnership Agreement”) as of December 9, 1996; and

WHEREAS, pursuant to that certain Warner Combination Agreement, dated as of May 30, 2003, by and among the Partnership, Colfax Corporation, a Delaware corporation (“Colfax:’), Warner, MPT Corp., Colfax Capital Corp., a Delaware Corporation, Janalia Corporation, a Delaware corporation, Equity Group Holdings L.L.C., a Delaware limited liability company and the security holders of Colfax, MPT Corp. and the Partnership (the “Combination Agreement”), the Limited Partners and CYC, as General Partner, shall transfer their respective interests in the Partnership to Warner;

WHEREAS, Warner shall acquire CYC’s General Partner interest in the Partnership and desires to replace CYC as General Partner;

WHEREAS, Section 4.09(a) of the Partnership Agreement provides that no Person shall be admitted as an additional or substituted General Partner of the Partnership without the prior written consent of the majority of the Limited Partners of the Partnership;

WHEREAS, MPT Corp. is the holder of a majority Limited Partner interest in the Partnership;

WHEREAS, Section 4.09(b) of the Partnership Agreement provides that no person shall be admitted as an additional or substituted Limited Partner of the Partnership without the prior written consent of the General Partner; and

WHEREAS, capitalized terms not defined herein shall have the meaning ascribed to them in the Partnership Agreement.

NOW THEREFORE, in consideration of the foregoing the Partnership Agreement is hereby amended as follows:

1. Upon the execution of this Amendment, Warner shall become a party to the Partnership Agreement in place of CYC, subject to the terms and conditions and entitled to the benefits thereof and shall succeed to the rights and liabilities of CYC, and CYC shall be dissociated from the Partnership.

2. Warner is hereby designated as the General Partner.

3. Warner shall be admitted as a Limited Partner with a 40% Limited Partner interest in the Partnership.

4. The definition of “General Partner” set forth in Article I, Section 1.01 of the Partnership Agreement is revised by replacing “Capital Yield Corp.” with “Warner Electric Group, Inc.”

5. The Partnership Agreement is hereby amended by deleting

Section 2.02 of the Partnership Agreement in its entirety and replacing it with the following:

“2.02 Authority. In order to carry out its purposes, the Partnership is empowered and authorized to do any and all acts and things necessary, appropriate, proper, advisable, desirable, incidental to or convenient for the furtherance and accomplishment of its purpose and for the protection and benefit of the Partnership, including but not limited to the following:

(a) buy, own, operate, assign, mortgage, or lease any property;

(c) borrow money and issue evidences of indebtedness in furtherance of the Partnership business and secure any such indebtedness by mortgage, pledge, or other lien;

(d) make contracts of guaranty and suretyship for the benefit of the General Partner or any other entity whose equity or other ownership interests are under the control, either directly or indirectly, of the ultimate parent of the General Partner, Colfax Corporation; and

(e) do any and all other acts and things necessary or desirable in furtherance of the Partnership’s business. ”

6. This Amendment shall act as a counterpart signature to the Partnership Agreement.

7. This Amendment may be executed in multiple counterparts, each of which shall constitute an original but all of which shall constitute but one and the same instrument.

8. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflict of laws.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the undersigned have caused this Second Amendment to the Agreement of Limited Partnership to be duly executed and delivered on their behalf, as of the day and year first above written.

	CAPITAL YIELD CORP.

	By:
		Name:
		Title:


	AMERICAN ENTERPRISES MPT CORP.

	By:
		Douglas Barnett
		Senior Vice President, Chief Financial Officer and Treasurer


	WARNER ELECTRIC GROUP, INC.

	By:
		Douglas Barnett
		Senior Vice President, Chief Financial Officer and Treasurer

American Enterprises MPT Holdings, L.P.

Second Amendment to the Agreement of Limited Partnership

American Enterprises MPT Holdings, L.P.

Third Amendment

Dated as of June 30, 2004

to the

Agreement of Limited Partnership

Dated as of December 9, 1996

THIRD AMENDMENT
TO THE
AGREEMENT OF LIMITED PARTNERSHIP
OF
AMERICAN ENTERPRISES MPT HOLDINGS, L.P.

This Third Amendment to the Agreement of Limited Partnership (this “Amendment”) of American Enterprises MPT Holdings, L.P., a Delaware limited partnership (the “Partnership”), is entered into as of June 30, 2004, by and between American Enterprises MPT Corp., a corporation organized under the laws of Delaware (“CLFX”) and CLFX Corporation, a limited corporation organized under the laws of Delaware (“MPT Holdings” and together with CLFX, the “Partners”).

WITNESSETH:

WHEREAS, the Partners entered into an Agreement of Limited Partnership (the “Partnership Agreement”) as of December 9, 1996;

WHEREAS, the Partners wish to amend the Partnership Agreement to authorize the appointment of officers of the Partnership by the General Partner; and

WHEREAS, capitalized terms not defined herein shall have the meaning ascribed to them in the Partnership Agreement.

NOW THEREFORE, in consideration of the foregoing, the Partnership Agreement is hereby amended as follows:

1. Upon the execution of this Amendment, the Partnership Agreement is hereby amended by inserting new Section 4.11 into the Partnership Agreement as follows:

“4.11 Officers.

The officers of the Partnership may include (i) a President, (ii) a Chief Executive Officer, (iii) a Treasurer, (iv) a Chief Financial Officer, (v) one or more Vice Presidents, and (vi) a Secretary and (vii) such other officers as the General Partner may in its sole discretion appoint. All officers shall report to and be subject to the direction and control of the General Partner and shall have such authority to perform such duties in the management of the Partnership as may be provided by the General Partner. Any number of offices may be held by the same person as appointed by the General Partner in its sole discretion. Each officer shall hold office until such officer’s death, resignation or removal. Any officer may resign at any time upon written notice to the Partnership. Such resignation shall take effect at

the date of receipt of such notice or at such later time as therein specified, and, unless otherwise specified, the acceptance of such resignation shall not be necessary to make it effective. The General Partner may remove any officer at any time with or without cause. Subject to the supervision and direction of the General Partner, each of the officers of the Partnership shall have the powers incidental to the comparable officer of a Delaware corporation and shall have such other powers and perform such other duties as the General Partner may from time to time assign to such officer; provided, that notwithstanding the foregoing the powers of any officer of the Partnership shall not exceed the powers granted to the General Partner hereunder and shall be subject to the same restrictions as apply to the powers of the General Partner. The officers shall be indemnified to the fullest extent of the law for any actions taken on behalf of the Partnership in accordance with the provisions of this Partnership Agreement.”

2. This Amendment shall act as a counterpart signature to the Partnership Agreement.

3. This Amendment may be executed in multiple counterparts, each of which shall constitute an original but all of which shall constitute but one and the same instrument.

4. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflict of laws.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the undersigned have caused this Third Amendment to the Agreement of Limited Partnership to be duly executed and delivered on their behalf, as of the day and year first above written.

	AMERICAN ENTERPRISES MPT CORP.

	By:	/s/ Thomas O’Brien
		Thomas O’Brien
		Senior Vice President, General Counsel and Secretary


	CLFX CORPORATION

	By:	/s/ Thomas O’Brien
		Thomas M. O’Brien
		Senior Vice President, General Counsel and Secretary

American Enterprises MPT Holdings, L.P.

Third Amendment to the Agreement of Limited Partnership

American Enterprises MPT Holdings, L.P.

Fourth Amendment

Dated as of November 29, 2004

to the

Agreement of Limited Partnership

Dated as of December 9, 1996

FOURTH AMENDMENT
TO THE
AGREEMENT OF LIMITED PARTNERSHIP
OF
AMERICAN ENTERPRISES MPT HOLDINGS, L.P.

This Fourth Amendment to the Agreement of Limited Partnership (this “Amendment”) of American Enterprises MPT Holdings, L.P., a Delaware limited partnership (the “Partnership”), is entered into as of November 29, 2004, by and between American Enterprises MPT Corp., a corporation organized under the laws of Delaware (“CLFX”) and Power Transmission Holdings LLC, a limited liability company organized under the laws of Delaware (“PT” and together with CLFX, the “Partners”).

WITNESSETH:

WHEREAS, pursuant to the Second Amendment to the Amendment of Limited Partnership of American Enterprises MPT Holdings, L.P. entered into as of May 30, 2003, CLFX Corporation (f.k.a. Warner Electric Group, Inc.), a Delaware corporation (“CLFX”) was designated as the general partner of the Partnership;

WHEREAS, pursuant to that certain Contribution Agreement dated as of July 2, 2004, CLFX contributed all of its partnership interests in the Partnership to Warner Electric Holdings, Inc., a Delaware corporation (“WEH”) and pursuant to that certain Contribution Agreement dated as of July 2, 2004, WEH contributed all of its partnership interests in the Partnership to PT;

WHEREAS, the Partners wish to amend the Agreement of Limited Partnership with this Amendment to reflect the contributions set forth above and to designate PT as the General Partner of the Partnership; and

WHEREAS, capitalized terms not defined herein shall have the meaning ascribed to them in the Partnership Agreement.

NOW THEREFORE, in consideration of the foregoing, the Partnership Agreement is hereby amended as follows:

1. Upon the execution of this Amendment, the Partnership Agreement is hereby amended by designating PT as the General Partner of the Partnership and Article I, Section 1.01 of the Partnership Agreement is revised by replacing “Warner Electric Group, Inc.” with “Power Transmission Holdings LLC.”

2. This Amendment shall act as a counterpart signature to the Partnership Agreement.

3. This Amendment may be executed in multiple counterparts, each of which shall constitute an original but all of which shall constitute but one and the same instrument.

4. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflict of laws.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the undersigned have caused this Fourth Amendment to the Agreement of Limited Partnership to be duly executed and delivered on their behalf, as of the day and year first above written.

	AMERICAN ENTERPRISES MPT CORP.

	By:	/s/ Thomas O’Brien
		Thomas O’Brien
		Senior Vice President, General Counsel and Secretary


	POWER TRANSMISSION HOLDINGS LLC

	By:	/s/ Thomas O’Brien
		Thomas M. O’Brien
		Senior Vice President, General Counsel and Secretary

American Enterprises MPT Holdings, L.P.

Fourth Amendment to the Agreement of Limited Partnership

EX-3.7 11 a2155511zex-3_7.htm EXHIBIT 3.7

Exhibit 3.7

STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 02:00 PM 10/15/2996
960299115 - 2673463

CERTIFICATE OF LIMITED PARTNERSHIP

AMERICAN ENTERPRISES MPT, L.P.

The undersigned, desiring to form a limited partnership pursuant to the Delaware Revised Uniform Limited Partnership Act, 6 Delaware Code, Chapter 17, hereby certifies as follows.

FIRST: The name of the limited partnership is American Enterprises MPT, L.P.

SECOND: The name and address of the Registered Agent is Corporation Service Company, 1013 Centre Road, Wilmington, Delaware 19805.

THIRD: The name and mailing address of the sole general partner is as follows:

American Enterprises MPT Corp.

9211 Forest Hill Avenue, Suite 109

Richmond, Virginia 23235

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Limited Partnership of American Enterprises MPT, L.P. as of October 15, 1996.

American Enterprises MPT Corp.
General Partner

By:	/s/ Michael G. Ryan
Name:			Michael G. Ryan
Title:		Vice President

	STATE OF DELAWARE
	SECRETARY OF STATE
	DIVISION OF CORPORATIONS
	FILED 09:00 AM 05/28/1997
	971172754 – 2673483

FIRST
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF LIMITED PARTNERSHIP
OF
AMERICAN ENTERPRISES MPT, L.P.

American Enterprises MPT, L.P. (the “Partnership”), a Limited partnership formed under the Delaware Revised Uniform Limited Partnership Act (the “Act”), for the purpose of amending its Certificate of Limited Partnership pursuant to the provisions of Section 17-202 of the Act, does hereby certify as follows:

1. The name of the limited partnership is:

American Enterprises MPT, L.P.

2. Article First of the Certificate of Limited Partnership is amended by deleting such Article First and replacing it with the following so that, as amended, Article First shall read in its entirety as follows:

“FIRST: The name of the limited partnership is Ameridrives International, L.P.”

IN WITNESS WHEREOF, the undersigned have caused this First Certificate of Amendment to the Certificate of Limited Partnership of the Partnership as of April 25, 1997.

AMERICAN ENTERPRISES MPT, L.P.

By:	American Enterprises MPT Corp., General Partner


	By:	/s/ Philip W. Knisely
		Philip W. Knisely
		President

EX-3.8 12 a2155511zex-3_8.htm EXHIBIT 3.8

Exhibit 3.8

AGREEMENT OF LIMITED PARTNERSHIP OF

AMERICAN ENTERPRISES MPT, L.P.

THIS AGREEMENT OF LIMITED PARTNERSHIP, dated as of the December 9, 1996 (the “Agreement”), by and between American Enterprises MPT Corp., a Delaware corporation (the “General Partner”) and American Enterprises MPT Holdings, L.P., a Delaware limited partnership (the “Limited Partner”).

WITNESSETH:

WHEREAS, a Certificate of Formation (the “Certificate”) to form the Partnership has been filed with the Secretary of State of the State of Delaware; and

WHEREAS, the General Partner and the Limited Partner desire to enter into this Agreement to continue the existence of the Partnership and to set forth their agreement as to their rights and obligations with respect to the Partnership;

NOW, THEREFORE, in consideration of the mutual promises herein set forth, the parties hereby agree as follows:

ARTICLE I
DEFINITIONS; FORMALITIES

1.01. Definitions.

“Act” means the Delaware Revised Uniform Limited Partnership Act, as amended.

“Additional Capital Contribution” means the amount of any additional capital contributions made by a Partner pursuant to Section 3.01(b) hereof.

“Agreement” means this Agreement of Limited Partnership, as originally executed and as hereafter amended or modified from time to time.

“Capital Account” means the account determined and maintained for each Partner in the manner provided for in the Tax Allocations Addendum.

“Capital Contribution” or “Capital Contributions” means the Initial Capital Contribution and any Additional Capital Contributions made by a Partner pursuant to Section 3.01 hereof.

“Capital Proceeds” means the amount of net proceeds received by the Partnership upon the sale or other disposition of all or a substantial portion of the Partnership’s business or assets other than in the ordinary course of the Partnership’s business that the General Partner determines to be available for distribution to the Partners after the payment or provision for payment (including the creation of reserves) of any Partnership indebtedness and other expenses and liabilities that the General Partner determines should be paid out of such proceeds, and the amount of any such reserves that the General Partner determines are available for distribution to the Partners.

“Certificate of Limited Partnership” means the Certificate of Limited Partnership, and any and all amendments thereto, filed on behalf of the Partnership with the Secretary of State of the State of Delaware as required under the Act.

“Code” means the Internal Revenue Code of 1986, as amended (or any corresponding provision or provisions of succeeding law).

“Fiscal Year” means the fiscal year of the Partnership, which shall end on December 31 of each year.

“General Partner” means American Enterprises MPT Corp., a Delaware corporation, and its successors or assigns or any other Person admitted as a substitute general partner pursuant to this Agreement.

“Initial Capital Contribution” means the amount of the capital contribution made by a Partner in accordance with Section 3.01(a).

“Limited Partner” means American Enterprises MPT Holdings, L.P., a Delaware limited partnership, and its successors or assigns.

“Minimum Return” means an annual rate of return of twelve percent (12.0%) on the amount of the Limited Partner’s Net Invested Capital outstanding from time to time, compounded annually.

“Net Invested Capital” means the sum of the Limited Partner’s Initial Capital Contributions and Additional Capital Contributions (if any) reduced, as and when made, by the amount of distributions to the Limited Partner pursuant to Sections 3.03(a) and 3.03(b)(i) which, pursuant to Section 3.03(c), are treated as a return of the Limited Partner’s Net Invested Capital.

“Net Capital Profits” means the amount of net income and gain realized by the Partnership for Federal income tax purposes with respect to a transaction giving rise to Capital Proceeds, as determined by the General Partner.

“Net Operating Profits” means, with respect to a fiscal period, the net income of the Partnership for Federal income tax purposes during such period excluding any Net Capital Profits, as determined by the General Partner.

“Net Losses” means, with respect to a fiscal period, the net loss of the Partnership (whether or not as a result of a transaction giving rise to Capital Proceeds) for Federal income tax purposes during such period, as determined by the General Partner.

“Operating Cash Flow” means, with respect to any fiscal period, an amount, determined by the General Partner in its sole and absolute discretion, equal to the cash revenues of the Partnership from all sources during such fiscal period, other than Capital Proceeds, plus such reserves that the General Partner determines are no longer necessary to provide for the foreseeable needs of the Partnership (other than any reserves created from Capital Proceeds), less (i) all cash expenditures of the Partnership during such fiscal period, including, without limitation, operating expenses, debt service, repayment of Partner Advances and interest thereon (which shall be repaid in full prior to any distribution of Operating Cash Flow), administrative expenses, and expenditures incurred by the Partnership in connection with capital transactions, and (ii) such reserves that the General Partner determines to be necessary or appropriate to provide for the foreseeable needs of the Partnership.

“Partners” means the General Partner and the Limited Partner. Reference to a “Partner” means either of the Partners.

“Partner Advances” means loans or advances, if any, made by a Partner to the Partnership from time to time pursuant to Section 3.01(b) hereof.

“Partnership” means the limited partnership formed under the Act by this Agreement by the parties hereto, as said Partnership may from time to time be constituted.

“Partnership Interest” means the entire interest of a Partner in the Partnership at any particular time, including the right of such Partner to any and all rights and benefits to which a Partner may be entitled as provided in this Agreement, together with the obligations of such Partner to comply with all the terms and provisions of this Agreement.

“Person” means any individual, partnership, corporation, trust, or other legal entity.

“Prime Rate” means for any period the daily average of the “base rate” for corporate loans at NationsBank, N.A. or such other large U.S. money center banks as shall be designated from time to time by the General Partner.

“Tax Allocations Addendum” means Exhibit B to this Agreement as it may be amended from time to time in accordance with Section 3.07 hereof.

“Tax Matters Partner” means the General Partner.

1.02. Continuation of Partnership: Certificate of Limited Partnership. The General Partner formed the Partnership on October 15, 1996, pursuant to the provisions of the Act. The Partners hereby execute this Agreement for the purpose of continuing the existence of the Partnership and setting forth the rights, duties and relationship of the Partners. If the laws of any jurisdiction in which the Partnership transacts business so require, the General Partner also shall file, with the appropriate office in that jurisdiction, a copy of the Certificate of Limited Partnership as filed with the office of the Secretary of State of the State of Delaware or any other documents necessary for the Partnership to qualify to transact business and to establish and maintain the Limited Partner’s limited liability under the Act.

1.03. Name. The name of the Partnership is American Enterprises MPT, L.P.

1.04. Names and Addresses of Partners. The names and addresses of the Partners as of the date of this Agreement are set forth in Exhibit A hereto.

1.05. Principal Place of Business. The principal place of business and the principal office of the Partnership shall be located at 1802 Pittsburgh Avenue, Erie, Pennsylvania. The Partnership may have such other or additional offices, either within or without the State of Delaware, as the General Partner shall deem advisable.

1.07. Term. The term of the Partnership commenced on October 15, 1996, and shall continue until the Partnership is dissolved in accordance with the provisions of this Agreement.

1.08. Title to Partnership Property. Legal title to the property of the Partnership shall be in the name of the Partnership.

ARTICLE II
BUSINESS OF THE PARTNERSHIP

2.01. Purposes. The purposes for which the Partnership is formed and the businesses to be carried on and promoted by it are:

(a) to acquire the business and assets of the Mechanical Power Transmission Group of Zurn Industries, Inc. pursuant to a certain Agreement for the Purchase and Sale of Assets dated October 15, 1996; and

(b) to engage in any one or more businesses or transactions, or to acquire all or any portion of any entity engaged in any one or more businesses or transactions which the General Partner, in its sole and absolute discretion, from time to time may authorize or approve, whether or not related to the business described in Section 2.01(a) or to any other business then engaged in by the Partnership.

(a) buy, own, operate, assign, mortgage, or lease any property;

(c) borrow money and issue evidences of indebtedness in furtherance of the Partnership business and secure any such indebtedness by mortgage, pledge, or other lien; and

(d) do any and all other acts and things necessary or desirable in furtherance of the Partnership’s business.

ARTICLE III
CAPITAL CONTRIBUTIONS,
DISTRIBUTIONS, AND ALLOCATIONS

3.01. Capital Contributions; Advances.

(a) The General Partner and the Limited Partner each shall make an Initial Capital Contribution to the Partnership in the amount set forth opposite such Partner’s name on Exhibit A.

(b) Partners shall be permitted (but shall not be required) to make Additional Capital Contributions to the Partnership from time to time as the General Partner, in its sole and absolute discretion, may request them to make. In addition, the Partners may (but shall be under no obligation to) loan or advance to the Partnership such funds as the General Partner, in its sole and absolute discretion, may request, with interest on such loans or advances to be at the Prime Rate plus one-quarter of one percentage point (“Partner Advances”).

(c) Except as provided in Section 3.03(b), no Partner shall have the right to demand the return of its Capital Contributions or Net Invested Capital prior to the dissolution and liquidation of the Partnership.

3.02. Capital Accounts. The Partnership shall keep a separate Capital Account for each Partner which shall be determined and maintained in the manner provided for in the Tax Allocations Addendum attached hereto as Exhibit B.

3.03. Distributions.

(a) The Partnership shall make distributions to the Partners of Operating Cash Flow, if any, from time to time as determined by the General Partner (subject to any applicable covenants or other restrictions contained in the Partnership’s loan agreements). All distributions of Operating Cash Flow shall be made in the ratio of 1% to the General Partner and 99% to the Limited Partner.

(b) The Partnership shall distribute to the Partners any Capital Proceeds realized by the Partnership within a reasonable period of time following the event giving rise to such Capital Proceeds, as determined by the General Partner (subject to any applicable covenants or other restrictions contained in the Partnership’s loan agreements). All distributions of Capital Proceeds and any distributions to be made to the Partners in connection with the liquidation of the Partnership, shall be made in accordance with the following priorities:

(i) first, in the ratio of 1% to the General Partner and 99% to the Limited Partner, to the extent necessary to provide the Limited Partner with an amount which, together with the amounts previously distributed to it pursuant to this Section 3.03, are sufficient to provide it with the Minimum Return and a return of its Capital Contributions;

(ii) second, to the Partners, to the extent of and in proportion to the remaining positive balances in their Capital Accounts (after taking into account, in the case of a distribution of Capital Proceeds, the allocation of the Net Capital Gain (if any) or Net Loss realized with respect to the transaction giving rise to such Capital Proceeds or, in the case of a distribution in connection with the liquidation of the Partnership, the allocation of all Net Operating Income, Net Capital Gain, and Net Loss made or to be made to the Partners); and

(iii) thereafter, to the Partners, in the ratio of 99% to the General Partner and 1% to the Limited Partner.

(c) For purposes of computing the amount of the Minimum Return and the Limited Partner’s Net Invested Capital, any distribution to the Limited Partner pursuant to Section 3.03(a) and 3.03(b)(i) shall be considered to be made first as payment of the Minimum Return as of the date such distribution is made and second as repayment of the Limited Partner’s Net Invested Capital.

3.04. Allocation of Profits and Losses.

(a) Subject to Section 4 of the Tax Allocations Addendum, Net Operating Profits with respect to each Fiscal Year (or portion thereof) shall be allocated in the ratio of 1% to the General Partner and 99% to the Limited Partner.

(b) Subject to Section 4 of the Tax Allocations Addendum, Net Capital Profits realized with respect to any Fiscal Year shall be allocated to the Partners (prior to giving effect to any distributions made or to be made to the Partners with respect to the Fiscal Year) in the following order of priority:

(i) first, to all Partners whose Capital Accounts have negative balances, in the ratio of such negative balances until such negative balances are brought to zero;

(ii) second, in the event the Capital Account balance of the Limited Partner is less than the amount to be distributed to it pursuant to

Section 3.03(b)(i), in the ratio of 1% to the General Partner and 99% to the Limited Partner, to the extent necessary to increase the Capital Account balance of the Limited Partner to equal the amount to be distributed to it pursuant to Section 3.03(b)(i); and

(iii) thereafter, any remaining Net Capital Profits shall be allocated to the Partners in the ratio of 99% to the General Partner and 99% to the Limited Partner.

(c) Subject to Section 4 of the Tax Allocations Addendum, any Net Losses shall be allocated to the Partners in the ratio of 1% to the General Partner and 99% to the Limited Partner.

3.05. Partnership Funds. All funds of the Partnership shall be deposited in such bank accounts as shall be designated by the General Partner and all withdrawals from such bank accounts shall be made by checks or other instruments signed by the designated representatives of the General Partner or such other Person or Persons as the General Partner may designate.

3.06. Tax Matters.

(a) The General Partner shall be the “Tax Matters Partner” for purposes of Code Sections 6221 through 6232, inclusive. As the Tax Matters Partner, the General Partner shall prepare and file all required income tax returns and shall manage administrative tax proceedings conducted at the Partnership level by the Internal Revenue Service with respect to Partnership matters.

(b) The Tax Allocations Addendum shall set forth in detail the policies and procedures which shall guide the tax accounting of the Partnership. Such policies and procedures shall be in accordance with all then-applicable provisions of the Code and regulations, including without limitation the provisions thereof governing allocation of gains and losses; provided, however, that such allocations (the “Regulatory Allocations”) shall be taken into account in allocating other profits, losses, and items of income, gain, loss and deduction among the Partners so that, to the extent possible, the net amount of such allocations of other profits, losses and other items and the Regulatory Allocations to each Partner shall be equal to the net amount that would have been allocated to each such Partner if the Regulatory Allocations had not occurred. The General Partner shall have the authority to amend the Tax Allocations Addendum from time to time as it deems necessary, in its sole and absolute discretion.

ARTICLE IV
RIGHTS, OBLIGATIONS, AND POWERS OF
THE PARTNERS

4.01. Authority of the General Partner.

4.02. Restrictions on General Partner’s Authority. Notwithstanding any other provision of this Agreement, including Section 4.01 and except as provided herein, the General Partner shall have no authority to do any of the following acts without obtaining the consent of the Limited Partner:

(i) to file a bankruptcy petition on behalf of the Partnership; or

(ii) to admit any general partner to the Partnership.

4.03. Management of Business. Except to the extent the consent of the Limited Partner may be required under Section 4.02, management of the Partnership’s business shall in every respect be the full and exclusive responsibility of the General Partner, which shall have all rights, powers and authorities permitted by the Act and the laws of the State of Delaware. The General Partner shall have the right, power and authority to delegate any or all

of its management duties to any other Person (including an affiliate of the General Partner) and to cause the Partnership to reasonably compensate any such Person for services rendered to or for the benefit of the Partnership, including a reasonable allowance for overhead expenses. The Limited Partner shall take no part in the management or control of the business of the Partnership or transact any business in the name of the Partnership. The Limited Partner shall have no power or authority to bind the Partnership or to sign any agreement or document in the name of the Partnership.

4.06. Partners or Affiliates Dealing with Partnership. Each of the Partners and any of their affiliates shall have the right to contract or otherwise deal with the Partnership.

4.07. Liability to Partnership and the Limited Partner. Except as provided in Section 5.01, the General Partner shall not be liable, responsible or accountable in damages, for the return of Capital Contributions or otherwise to the Limited Partner or to the Partnership for any acts performed in good faith and within the scope of this Agreement except to the extent that a court of competent jurisdiction finds, upon entry of a final judgment, that its actions and/or omissions are attributable to gross negligence, willful misconduct, recklessness, malfeasance or fraud.

4.08. Indemnification.

(a) The Partnership shall indemnify, defend and hold harmless the Partners, their stockholders, owners, partners, directors, officers, employees and agents from and against any loss, liability, damage, cost or expense (including reasonable attorneys fees) arising out of or alleged to arise out of any demands, claims, suits, actions or proceedings against any of them in or as a result of or relating to their respective capacities, actions or omissions with respect to the Partnership, or otherwise concerning the business or affairs of the Partnership

including, without limitation, any demands, claims, suits, actions or proceedings, initiated by any of the Partners; provided, however, that the acts or omissions of the General Partner shall not be indemnified thereunder to the extent a court of competent jurisdiction finds, upon entry of a final judgment, that the same resulted from gross negligence, willful misconduct, recklessness, malfeasance or fraud. Any indemnification under this Section 4.08 shall be made from the assets of the Partnership, and no Partner shall be personally liable therefor.

(b) The rights of indemnification contained in this Section 4.08 shall be cumulative of, and in addition to, any and all rights, remedies and recourse to which any indemnified party shall be entitled, whether pursuant to the provisions of this Agreement, at law or in equity. Indemnification shall be made solely and entirely from assets of the Partnership (excluding, for these purposes, all assets of the Partners other than those of and attributable to such Partner’s interest in the Partnership), and the Limited Partner shall not be personally liable to any indemnified party under this Section 4.08.

(c) Any Person, when entitled to indemnification pursuant to this Section 4.08, shall be entitled to receive, upon application therefor, advances to cover the costs of defending any proceeding. All rights to indemnification hereunder shall survive the dissolution of the Partnership and the death, retirement, incompetency, insolvency or bankruptcy of any Partner.

4.09. Transfers of Partnership Interests. No Partner shall at any time transfer all or any part of its Partnership Interest, and any attempt to assign or transfer a Partnership Interest shall be null and void ab initio. For this purpose, the term “transfer” shall include any sale, assignment, gift, pledge, hypothecation, mortgage, exchange, or other disposition, except that such term shall not include any pledge, mortgage, or hypothecation of or granting of a security interest in a Partnership Interest in connection with any financing obtained on behalf of the Partnership or any transfer pursuant to a foreclosure with respect to the same.

4.10. Limitation on Liability of Limited Partner. The liability of the Limited Partner shall be limited to its Capital Contributions. The Limited Partner shall have no other liability to contribute money to, or in respect of the liabilities or obligations of, the Partnership, nor shall the Limited Partner (or any of its partners) be personally liable for any obligations of the Partnership.

ARTICLE V
EFFECT OF MERGER

In the event the Partnership is merged with or into any other entity or interests in the Partnership are otherwise exchanged for interests in another

entity in a transaction in which the Partnership is not the surviving entity, the interests of the Partners in the resulting or surviving entity shall be allocated among the Partners in proportion to the amounts the Partners would receive if those interests were distributed in liquidation of the Partnership pursuant to Section 3.03(b). The General Partner is authorized to make such adjustments and arrangements with respect to the ownership of the interests in the resulting or surviving entity as the General Partner, in its reasonable discretion, deems necessary to properly reflect the economic interests of the Partners in the Partnership and to otherwise give effect to this Article V.

ARTICLE VI
MISCELLANEOUS PROVISIONS

6.01. Dissolution.

(a) The Partnership shall be dissolved and its affairs wound up upon the occurrence of any of the following events:

(i) the consent in writing to dissolve and wind up the affairs of the Partnership by all of the Partners;

(ii) the Bankruptcy (as hereinafter defined) of the General Partner;

(iii) the sale or other disposition (voluntarily or involuntarily) by the Partnership of all or substantially all of its assets and the collection of all amounts derived from any such sale or other disposition, including all amounts payable to the Partnership under any promissory notes or other evidences of indebtedness taken by the Partnership (unless the General Partner shall elect to distribute such indebtedness to the Partners in liquidation), and the satisfaction of contingent liabilities of the Partnership in connection with such sale or other disposition; and

(iv) the occurrence of any event that, under the Act, would cause the dissolution of the Partnership or that would make it unlawful for the business of the Partnership to be continued.

For the purpose of this Agreement, the term “Bankruptcy” shall mean, and the General Partner shall be deemed “Bankrupt” upon, (A) the entry of a decree or order for relief of the General Partner by a court of competent jurisdiction in any involuntary case involving the General Partner under any bankruptcy, insolvency, or other similar law nor or hereafter in effect; (B) the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, or other similar agent for the General Partner or for any substantial part of the General Partner’s assets or

property; (C) the ordering of the winding up or liquidation of the General Partner’s affairs; (D) the filing with respect to the General Partner of a petition in any such involuntary bankruptcy case, which petition remains undismissed for a period of ninety (90) days or which is dismissed or suspended pursuant to Section 305 of the Federal Bankruptcy Code (or any corresponding provision of any future United States bankruptcy law); (E) the commencement by the General Partner of a voluntary case under any bankruptcy, insolvency, or other similar law nor or hereafter in effect; (F) the consent by the General Partner to the entry of an order for relief in an involuntary case under any such law or the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, or other similar agent for the Member or for any substantial part of the General Partner’s assets or property; (G) the making by the General Partner of any general assignment for the benefit of creditors; or (H) the failure by the General Partner generally to pay its debts as such debts become due.

(b) Dissolution of the Partnership shall be effective on the day on which the event occurs giving rise to the dissolution, but the Partnership shall not terminate until the assets of the Partnership have been distributed as provided in Section 6.01(c). Notwithstanding the dissolution of the Partnership, prior to the termination of the Partnership, as aforesaid, the business of the Partnership shall continue to be governed by this Agreement.

(i) to the payment of the expenses of liquidation and the debts and liabilities of the Partnership (other than any debts or liabilities of the Partnership to any of the Partners);

(iv) to all Partners in the order of priority set forth in Section 3.03(b).

(e) Upon the completion of the liquidation of the Partnership and the distribution of all Partnership funds, the Partnership shall terminate and the General Partner shall have the authority to execute and record any and all other documents required to effectuate the dissolution and termination of the Partnership.

(f) Notwithstanding anything in this Agreement to the contrary, if upon completion of the liquidation of the Partnership the balance of the Capital Account of the General Partner is negative (after taking into account all allocations to be made to the Partners for all periods through such liquidation), the General Partner shall contribute to the Partnership an amount of cash equal to the lesser of (i) the amount of such deficit balance, and (ii) the difference between one and one hundredths percent (1.01%) of the Capital Contributions of the Limited Partner and the amount of Capital Contributions made by the General Partner, which amount shall be paid to creditors of the Partnership or distributed to the Limited Partner. This Section 6.01(f) is included in this Agreement in order to enable the General Partner to satisfy the minimum capital account balance requirement set forth in IRS Rev. Proc. 89-12 and shall be interpreted and applied so as to give effect to such purpose.

6.02. Amendment. Except as otherwise expressly provided herein, this Agreement may be amended only by the written consent of both the General Partner and the Limited Partner, provided, however, that Section 4.09 and Section 6.01(a) of this Agreement shall not be amended unless and until the IRS “check the box” proposal set forth in Notice 95-14 has been adopted and become effective or the substantive provisions set forth in such notice otherwise have become law.

6.03. Records and Reports.

the calendar year, unless otherwise determined by the General Partner (the “Fiscal Year”).

(c) As soon as reasonably practical, but in no event later than 180 days following the end of each Fiscal Year of the Partnership, the General Partner shall send to the Limited Partner such Partnership information as shall be reasonably necessary for the preparation by such Limited Partner of its Federal and state income tax returns.

6.05. Miscellaneous.

(a) Each provision hereof is intended to be severable and the invalidity or illegality of any portion of this Agreement shall not affect the validity or legality of the remainder hereof.

respective Partners. This subsection shall not be construed as creating any right to assign any Partner’s Partnership Interest.

(d) This Agreement (including the Exhibits hereto) constitutes the entire agreement of the parties hereto with respect to the matters set forth herein and supersedes any prior understanding or agreement, oral or written, with respect thereto.

(e) This Agreement may be executed in counterparts and as so executed shall constitute one Agreement, binding on all the parties thereto.

(f) No waiver of any provision of this Agreement shall be valid unless in writing and signed by the Person or party against whom charged.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

THE GENERAL PARTNER:		THE LIMITED PARTNER:

AMERICAN ENTERPRISES MPT CORP.		AMERICAN ENTERPRISES MPT HOLDINGS, L.P.


By:	/s/ Philip W. Knisely	By:	Capital Yield Corp.,
Name: Philip W. Knisely			its General Partner
Title: President

			By:	/s/ Michael G. Ryan
			Name: Michael G. Ryan
			Title: President

EXHIBIT A

Partner Name and Address	Initial Capital Contribution

GENERAL PARTNER:

American Enterprises MPT Corp.	$	10,000
9211 Forest Hill Avenue
Suite 109
Richmond, Virginia 23235

LIMITED PARTNER:

American Enterprises MPT Holdings, L.P.	$	19,990,000
9211 Forest Hill Avenue
Suite 109
Richmond, Virginia 23235

EXHIBIT B

Tax Allocations Addendum

1. Purpose.

This Tax Allocations Addendum (the “Addendum”) is attached to, and constitutes a part of, the Agreement of Limited Partnership of American Enterprises MPT, L.P., as it may be amended from time to time (the “Agreement”), for the purpose of setting forth the rules governing the maintenance of the Capital Accounts required to be maintained for each Partner under the Agreement and the rules governing the allocation of the Partnership’s items of income, gain, loss, deduction, and credit. This Addendum is to be construed and applied to the extent practicable in a manner consistent with the Partners’ agreement with respect to Partnership distributions as set forth in Section 3.03 of the Agreement.

2. Certain Definitions.

Unless otherwise provided in this Addendum, all capitalized terms used in this Addendum shall have the meanings assigned to them in other provisions of the Agreement. In addition, the following terms shall have the meanings indicated:

Addendum: This Tax Allocations Addendum, as it may be amended from time to time.

Adjusted Basis: The basis for determining gain or loss for federal income tax purposes from the sale or other disposition of property, as defined in section 1011 of the Code.

Book Tax Gain and Book Tax Loss: The amount of taxable gain or loss that would result from a Capital Transaction if the Adjusted Basis at the time of the Capital Transaction of the Partnership assets with respect to which such Capital Transaction occurs were equal to the Carrying Value of such Partnership assets at such time.

Capital Transaction: A sale, condemnation, abandonment or other disposition of Partnership assets, an insurance recovery with respect to Partnership assets, or other transaction that, in accordance with generally accepted accounting principles, is considered capital in nature.

A-1

Carrying Value: (a) With respect to any asset contributed to the Partnership (including any asset deemed to be contributed to the Partnership as a result of a revaluation of Partnership assets on the Partnership’s books pursuant to section 3(d) of this Addendum), the fair market value of such asset at the time of contribution (as determined by the Partners) reduced, but not below zero, by all deductions for depreciation, amortization, cost recovery, and expense in lieu of depreciation debited to the Capital Accounts of the Partners pursuant to section 3 of this Addendum with respect to such asset as of the time the Carrying Value is to be determined; and (b) with respect to any other asset of the Partnership, the Adjusted Basis of such asset as of the time the Carrying Value is to be determined.

Excess Deficit Balance: The deficit balance, if any, in a Partner’s Capital Account as of the end of a Fiscal Year after crediting the Partner’s Capital Account for (i) the amount of any deficit balance in such Capital Account that the Partner is obligated to restore or is treated as obligated to restore pursuant to Regulations sections 1.704-1(b)(2)(ii)(b)(3) and 1.704-1(b)(2)(ii)(c) or is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations sections 1.704-2(g)(1) and 1.704-2(i)(5), and debiting the Partner’s Capital Account for any adjustment, allocation, or distribution described in paragraph (4), (5), or (6) of Regulations section 1.704-1(b)(2)(ii)(d).

Fiscal Year: The fiscal year of the Partnership for financial accounting purposes and for federal, state, and local income tax purposes, which shall be the calendar year.

Net Income and Net Loss: For any taxable period, (i) the gross income of the Partnership from all sources, other than any income or loss recognized with respect to a Capital Transaction during such period, as calculated for federal income tax purposes by the Partnership, plus (ii) any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing gross income for federal income tax purposes, reduced by (iii) Depreciation (as defined below), further reduced by (iv) all other items of expense or deduction that are allowable as deductions to the Partnership under the Code for such period but excluding any item of expense or deduction attributable either to Depreciation (as defined below) or to a Capital Transaction, as calculated for federal income tax purposes by the Partnership, and further reduced by (v) any expenditures of the Partnership described in section 705(a)(2)(B) of the Code or treated as expenditures described in section 705(a)(2)(B) of the Code pursuant to Regulations section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing taxable income. “Depreciation” means, for each taxable period, an amount equal, to the depreciation, amortization, or other cost recovery deductions allowable with respect to Partnership assets for such period for federal income tax purposes

A-2

computed (using the same method used by the Partnership in computing depreciation, amortization, or other cost recovery deductions in preparing its federal income tax returns) as if the Adjusted Basis of such Partnership assets were equal to their Carrying Values. All items of income, gain, loss, deduction, and credit recognized by the Partnership for federal income tax purposes and allocated to the Partners in accordance with the provisions of section 4 of this Addendum shall be determined without regard to any election that may be made by the Partnership under Code section 754 except as expressly contemplated under Regulations section 1.704-1(b)(2)(m)(4); provided, however, that such allocations, once made, shall be adjusted as necessary to take into account those adjustments authorized under sections 734 and 743 of the Code.

Regulations: The regulations issued by the United States Department of the Treasury under the Code as now in effect and as they may be amended from time to time, and any successor regulations.

Unrealized Gain: As to any Partnership asset, the Book Tax Gain, if any, that would be realized if such Partnership asset were sold for its fair market value on the date of determination.

Unrealized Loss: As to any Partnership asset, the Book Tax Loss, if any, that would be realized if such Partnership asset were sold for its fair market value on the date of determination.

3. Maintenance of Capital Accounts.

(a) Capital Accounts shall be maintained for each Partner in accordance with the rules set forth in Regulations section 1.704-1(b)(2)(iv). The initial Capital Account balance of each Partner as of the date of this Agreement shall be equal to the Net Invested Capital set forth opposite such Partner’s name on Exhibit A to the Agreement. In general, the Capital Account of each Partner thereafter shall be credited with:

(i) the amount of cash and the Carrying Value of any property (net of liabilities assumed by the Partnership and liabilities to which the contributed property is subject) contributed to the Partnership by such Partner, plus

(ii) all Net Income and Book Tax Gains of the Partnership computed in accordance with section 3(b) of this Addendum and allocated to such Partner pursuant to Section 3.04 of the Agreement and

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section 4 of this Addendum (including for purposes of this section 3(a) income and gain exempt from tax);

and shall be debited with the sum of:

(iii) all Net Losses, Book Tax Losses, and deductions of the Partnership computed in accordance with section 3(b) of this Addendum and allocated to such Partner pursuant to Section 3.04 of the Agreement and section 4 of this Addendum,

(iv) such Partner’s distributive share of expenditures of the Partnership described in section 705(a)(2)(B) of the Code, and

(v) all cash and the fair market value of any property (net of liabilities assumed by such Partner and liabilities to which such property is subject) distributed by the Partnership to such Partner pursuant to Section 3.03 of the Agreement.

Any references in this Addendum or in the Agreement to the Capital Account of a Partner shall be deemed to refer to such Capital Account as the same may be credited or debited from time to time as set forth above.

(b) For purposes of computing the amount of any item of income, gain, deduction, or loss to be reflected in Capital Accounts, the determination, recognition, and classification of each such item shall be the same as its determination, recognition, and classification for federal income tax purposes, provided that:

(i) any deductions for depreciation, cost recovery, amortization, or expense in lieu of depreciation attributable to a Partnership asset, and any gain or loss arising in connection with a Capital Transaction involving a Partnership asset shall be determined as if the Adjusted Basis of such asset were equal to its Carrying Value;

(ii) immediately prior to decreasing a Partner’s Capital Account to reflect any distribution of a Partnership asset to him (other than cash), all Partners’ Capital Accounts shall be adjusted to reflect the manner in which the Unrealized Gain or

A-4

Unrealized Loss inherent in such Partnership asset (that has not been reflected in the Capital Accounts previously) would be allocated among the Partners if there were a taxable disposition of such Partnership asset for its fair market value (but not less than the amount of any nonrecourse indebtedness secured by such Partnership asset); and

(iii) adjustment to a Partner’s Capital Account in respect of Partnership income, gain, loss, deduction, and Code section 705(a)(2)(8) expenditures (as described in Regulations section 1.704-1(b)(2)(iv)(i)) (or items thereof) shall be made with reference to the federal tax treatment of such items (and, in the case of book tax items, with reference to the federal tax treatment of the corresponding tax items) at the Partnership level, without regard to any required or elective tax treatment of such items at the Partner level.

(d) The General Partner shall have the discretion to increase or decrease the Capital Account balances of the Partners to reflect a revaluation of Partnership assets on the Partnership’s books to the extent required or permitted by the Regulations. Any such adjustments must be based on the fair market value of the Partnership assets as determined by the Partners (provided that no Partnership asset shall be valued at an amount less than any nonrecourse indebtedness to which such Partnership asset is subject on the date of adjustment) and must reflect the manner in which the unrealized income, gain, loss, or deduction inherent in such Partnership assets (that has not been reflected in a Capital Account previously) would be allocated among the Partners if there were a taxable disposition of such Partnership assets for such fair market value on that date.

(e) Any transferee of an interest in the Partnership shall succeed to the Capital Account relating to the interest transferred.

(f) Any special basis adjustments resulting from an election by the Partnership pursuant to section 754 of the Code shall not be taken into account for any purpose in establishing and maintaining Capital Accounts for the Partners, except as provided in Regulations section 1.704-1(b)(2)(iv)(m).

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(g) If any transfer of a Partner’s interest in the Partnership causes a termination of the Partnership under section 708(b)(1)(B) of the Code, the Capital Account that carries over to the transferee Partner shall be adjusted in accordance with Regulations section 1.704-1(b)(2)(iv)(e) in connection with the constructive liquidation of the Partnership under Regulations section 1.708-1(b)(1)(iv). Moreover, the constructive reformation of the Partnership will be treated as the formation of a new Partnership, and the Capital Accounts of the Partner in such new Partnership will be determined and maintained accordingly taking into account, for example, the difference between the fair market value of the Partnership property and its Carrying Value on the date of such constructive reformation.

(h) The foregoing provisions of this section 3 and any other provisions of the Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations section 1.704-1(b) as they currently exist and as they subsequently may be amended, and they shall be interpreted and applied in a manner consistent with such Regulations. In the event the General Partner determines, in its reasonable discretion, that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto, are computed in order to comply with such Regulations, the General Partner may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any Partner upon dissolution of the Partnership. Also, the General Partner shall make any appropriate modifications whenever unanticipated events might otherwise cause the Agreement not to comply with such Regulations.

4. Special Allocation Rules.

The following allocation rules shall apply notwithstanding the provisions of Section 3.04 of the Agreement, and the provisions of Section 3.04 of the Agreement shall be applied only after giving effect to the following rules. In the event there is a conflict between any of the following rules, the earlier listed rule shall govern.

(a) In the event a Partner receives with respect to a Fiscal Year an adjustment, allocation, or distribution described in subparagraphs (4), (5), or (6) of Regulations section 1.704-1(b)(2)(ii)(d) that causes or increases an Excess Deficit Balance in such Partner’s Capital Account, such Partner shall be specially allocated for such Fiscal Year (and, if necessary, in subsequent Fiscal Years) items of income and gain in an amount and manner sufficient to eliminate such Excess Deficit Balance as promptly as possible, as provided in Regulations section 1.704-1(b)(2)(ii)(d).

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(b) In the event that any fees, interest, or other amounts paid to a Partner or affiliate of a Partner pursuant to the Agreement, or any agreement between the Partnership and the Partner or affiliate providing for the payment of such amounts, and deducted by the Partnership, whether in reliance on sections 162, 163, 707(a), and/or 707(c) of the Code or otherwise, on its federal income tax return for the Fiscal Year in or with respect to which such amounts are claimed, are disallowed as deductions to the Partnership and are treated as Partnership distributions, then:

(i) the Net Income or Net Loss, as the case may be, for the Fiscal Year in or with respect to which such deduction was claimed shall be increased or decreased, as the case may be, by the amount of such deduction that is so disallowed and treated as a Partnership distribution; and

(ii) there shall be allocated to the Partner who received (or whose affiliate received) such payments, prior to the allocations pursuant to Section 3.04 of the Agreement and section 4 of this Addendum, an amount of gross income of the Partnership for the Fiscal Year in or with respect to which such claimed deduction was disallowed equal to the amount of such deduction that is so disallowed and treated as a Partnership distribution.

(c) Except as otherwise specifically provided in this Addendum and as provided in the next sentence below, the distributive share of a Partner of each specific deduction and item of income, gain, loss, and credit of the Partnership for federal income tax purposes for any Fiscal Year shall be the same as such Partner’s proportionate share (determined as set forth in Section 3.04 of the Agreement and section 4 of this Addendum) of Net Income, Net Loss, Book Tax Gain, or Book Tax Loss, as the case may be, for such Fiscal Year. Notwithstanding the foregoing, any income recognized pursuant to sections 1245 and 1250 of the Code and any investment credit recapture recognized pursuant to section 47 of the Code shall be allocated among the Partners in the same proportions as the depreciation deductions and investment credits giving rise to such income or recapture were allocated among such Partners and their respective predecessors in interest.

(d) In the event that any property contributed to the Partnership or revalued pursuant to the provisions of Regulations section 1.704-1(b)(2)(iv)(f) has a Carrying Value that differs from the Adjusted Basis of such property at the time of its contribution or revaluation, any income, depreciation, gain, or

A-7

loss with respect to such property shall, solely for tax purposes, be allocated among the Partners in a manner that takes such difference into account and is consistent with Code section 704(c), the Regulations thereunder, and Regulations sections 1.704-1(b)(2)(iv)(f)(4), 1.704-1(b)(2)(iv)(g), and 1.704-1(b)(4)(i). The allocations made pursuant to this section 4(d) shall be made solely for tax purposes and shall not affect or in any way be taken into account in computing any Partner’s Capital Account or share of Net Income, Net Loss, Book Tax Gain, Book Tax Loss, or other allocations or distributions under this Addendum or the Agreement.

(e) In the event that the Partnership should incur any Partnership liability (or portion thereof) which is considered nonrecourse for purposes of Regulations section 1.1001-2, the General Partner shall amend this Addendum to incorporate the requirements of the Regulations under Code sections 752 and 704. Allocations pursuant to this Addendum shall be made consistent with those requirements, whether or not this Addendum is amended.

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FIRST AMENDMENT OF
AGREEMENT OF LIMITED PARTNERSHIP OF
AMERICAN ENTERPRISES MPT, L.P.

American Enterprises MPT Corp., a Delaware corporation (the “General Partner”) and American Enterprises MPT Holdings, L.P., a Delaware limited partnership (the “Limited Partner”), constituting all of the partners (the “Partners”) of American Enterprises MPT Limited Partnership (the “Partnership”), execute and deliver this First Amendment of Agreement of Limited Partnership (the “Amendment”) as of January , 1997.

WHEREAS, the General Partner and the Limited Partner desire to change the name of the Partnership to “Ameridrives International, L.P.”

NOW, THEREFORE, the Partners hereby agree as follows:

1. The General Partner and the Limited Partner hereby amend the Agreement of Limited Partnership of American Enterprises MPT Limited Partnership (the “Agreement”) to change the name of the Partnership to “Ameridrives International, L.P.” Each reference in the Agreement to American Enterprises MPT, L.P. hereafter shall be deemed to be a reference to Ameridrives International, L.P.

2. The General Partner is authorized and directed to execute and deliver on behalf of the Partnership a Certificate of Amendment and all other instruments as may necessary or appropriate to effect the foregoing change of the Partnership’s name.

IN WITNESS WHEREOF, the parties have executed and delivered this First Amendment as of the day and year first above written.

THE GENERAL PARTNER:		THE LIMITED PARTNER:

AMERICAN ENTERPRISES MPT CORP.		AMERICAN ENTERPRISES MPT HOLDINGS, L.P.


By:	/s/ Philip W. Knisely	By:	Capital Yield Corp.,
Name: Philip W. Knisely			its General Partner
Title: President

			By:	/s/ Michael G. Ryan
			Name: Michael G. Ryan
			Title: President

FIRST AMENDMENT
TO THE
AGREEMENT OF LIMITED PARTNERSHIP
OF
AMERIDRIVES INTERNATIONAL, L.P.

This First Amendment to the Agreement of Limited Partnership (this “Amendment”) of Ameridrives International, L.P., a Delaware limited partnership (the “Partnership”), is entered into as of June 30, 2004, by and between American Enterprises MPT Corp., a corporation organized under the laws of Delaware (“MPT Corp.”) and American Enterprises MPT Holdings L.P., a limited partnership organized under the laws of Delaware (“MPT Holdings” and together with MPT Corp., the “Partners”).

WITNESSETH:

WHEREAS, the Partners entered into an Agreement of Limited Partnership (the “Partnership Agreement”) as of December 9, 1996;

WHEREAS, the Partners wish to amend the Partnership Agreement to authorize the appointment of officers of the Partnership by the General Partner; and

WHEREAS, capitalized terms not defined herein shall have the meaning ascribed to them in the Partnership Agreement.

NOW THEREFORE, in consideration of the foregoing, the Partnership Agreement is hereby amended as follows:

1. Upon the execution of this Amendment, the Partnership Agreement is hereby amended by inserting new Section 4.11 into the Partnership Agreement as follows:

“4.11 Officers.

2. This Amendment shall act as a counterpart signature to the Partnership Agreement.

3. This Amendment may be executed in multiple counterparts, each of which shall constitute an original but all of which shall constitute but one and the same instrument.

4. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflict of laws.

[SIGNATURE PAGE FOLLOWS]

	AMERICAN ENTERPRISES MPT CORP.

	By:	/s/ Thomas M. O’Brien
		Thomas M. O’Brien
		Senior Vice President, General Counsel and Secretary



	AMERICAN ENTERPRISES MPT HOLDINGS L.P.

	By:	/s/ Thomas M. O’Brien
		Thomas M. O’Brien
		Senior Vice President, General Counsel and Secretary

EX-3.9 13 a2155511zex-3_9.htm EXHIBIT 3.9

Exhibit 3.9

CERTIFICATE OF FORMATION
OF
BOSTON GEAR LLC

THIS Certificate of Formation of Boston Gear LLC (the “Company”), dated as of June 30, 2004, is being duly executed and filed by Thomas M. O’Brien, as an authorized person, to form a limited liability company under the Delaware Limited Liability Company Act (6 Del. C. §18-101, et seq.).

1. Name. The name of the limited liability company is Boston Gear LLC.

2. Registered Office. The address of the registered office of the Company in the State of Delaware is c/o Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808.

3. Registered Agent. The name and address of the registered agent for service of process on the Company in the State of Delaware are Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation as of the date first-above written.

	/s/ Thomas M. O’Brien
	Thomas M. O’Brien
	Authorized Person

	State of Delaware
	Secretary of State
	Division of Corporations
	Delivered 10:25 AM 06/30/2004
	FILED 10:19 AM 06/30/2004
	SRV 040482228 - 3822981 FILE

EX-3.10 14 a2155511zex-3_10.htm EXHIBIT 3.10

Exhibit 3.10

LIMITED LIABILITY COMPANY AGREEMENT

BOSTON GEAR LLC

THIS LIMITED LIABILITY COMPANY AGREEMENT of Boston Gear LLC (the “Agreement”) is effective as of June 30, 2004.

Recitals:

A. Thomas M. O’Brien, as an authorized person, has executed and filed a Certificate of Formation, dated June 30, 2004 (the “Certificate”), to form “Boston Gear LLC” (the “Company”) as a limited liability company under and pursuant to and in accordance with the Delaware Limited Liability Company Act, as amended (6 Del. C. § 18-101, et seq.) (the “Act”). The powers of the authorized person shall terminate upon the filing of the Certificate.

B. Power Transmission Holding LLC is the sole member of the Company (the “Member”).

C. By executing this Agreement, the Member hereby ratifies the Certificate and adopts this Agreement to set forth the terms governing the affairs of the Company and the conduct of its business.

Terms of Agreement:

1. Name. The name of the Company is Boston Gear LLC The Member may change the name of the Company from time to time.

2. Purpose and Powers. The purpose of the Company is to engage in any lawful act or activity for which a limited liability company may be organized under the Act. The Company shall have all power necessary or convenient for the conduct, promotion, or attainment of such acts and activities.

3. Registered Office and Agent. The address of the Company’s registered office in the State of Delaware is Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19805-1297. The name of the Company’s registered agent at such address is Corporation Service Company.

4. Capital Contributions. As of the date of this Agreement, the Member is the sole member of the Company. The Member has made an initial contribution to the capital of the Company in respect of the entire limited liability company interest (within the meaning of the Act) of the Company (the “Interest”).

Except to the extent required under the Act, the Member shall not be required to make any additional contributions to the capital of the Company.

5. Interest Governed by Article 8; Certificates. Limited liability company interests in the Company, including the Interest, shall be securities governed by Article 8 of the Delaware Uniform Commercial Code. The Company shall have the authority to issue certificates of limited liability company interests evidencing limited liability company interests in the Company, including the Interest, in accordance with Section 18-702(c) of the Act.

6. Member Managed. The Member shall have the exclusive power and authority to manage the business and affairs of the Company and to make all decisions with respect thereto. Except as otherwise expressly provided in this Agreement, the Member or persons designated by the Member, including officers and agents appointed by the Member, shall be the only persons authorized to execute documents on behalf of the Company.

7. Officers; Agents.

(a) Authority to Appoint and Remove. The Member shall have the power to appoint agents (who may be referred to as officers) to act for the Company with such titles, if any, as the Member deems appropriate and to delegate to such officers or agents such of the powers as are granted to the Member hereunder, including the power to execute documents on behalf of the Company, as the Member in its sole discretion may determine.

(b) Officers. The officers of the Company, if any, shall be elected or appointed by the Member from time to time in its discretion. Any two or more offices may be held by the same person. The officers of the Company as of the date of this Agreement are (i) a President, (ii) a Chief Executive Officer, (iii) one or more Senior Vice Presidents and/or Vice Presidents, (iv) a Treasurer, (v) a Chief Financial Officer, (vi) a Controller, (vii) a General Counsel, (viii) a Secretary and (ix) one or more Assistant Controllers and Assistant Secretaries. The Member may change the officers of the Company at any time. The persons appointed as officers as of the date of this Agreement are as follows:

John A. Young	President and Chief Executive Officer
	Acting Treasurer and Chief Financial Officer
Thomas M. O’Brien	Senior Vice President, General Counsel and Secretary
Steven W. Weidenmuller	Senior Vice President, Human Resources
William Flexon	Vice President, Taxes
G. Scott Faison	Vice President and Controller
Joseph O. Bunting, III	Vice President and Assistant Secretary
Michael G. Ryan	Vice President
Charles W. Nims	Vice President
Douglas A. Sulanke	Assistant Controller
Traci Benish	Assistant Secretary

The Member from time to time may appoint one or more other persons to serve as officers of the Company and may remove any person serving as an officer, with or without cause, at any time. Each officer shall hold his or her respective office for any term specified by the Member unless earlier removed by the Member. Any officer or agent of the Company may resign at any time by giving written notice to the Member. Any such resignation shall take effect at the time specified therein or, if no time is specified, upon receipt thereof; and unless otherwise specified therein, acceptance of such resignation shall not be necessary to make it effective. The officers of the Company shall be entitled to such salary or other compensation as the Member shall determine.

(c) Powers and Authority. Unless otherwise specified by the Member, the duties and authority of the officers to act on behalf of the Company shall include the same duties and authority to act on behalf of a Delaware corporation as an officer of a Delaware corporation with the same title would have in the absence of a specific delegation of authority. Third parties dealing with the Company shall be entitled to rely conclusively upon the power and authority of the officers of the Company as set forth herein. All officers other than the President shall report to the President.

8. Limitation on Liability; Indemnification. Except as otherwise provided in the Act, the debts, obligations, and liabilities of the Company, whether arising in contract, tort, or otherwise, shall be solely the debts, obligations, and liabilities of the Company. None of the Member and any officers, employees, and agents of the Company or the Member shall be obligated personally for any debt, obligation, or liability of the Company solely by reason of his, her, or its status as such Member, officer, employee, or agent. In accordance with Section 18-108 of the Act, the Company shall indemnify and hold harmless the Member and each officer of the Company (individually, in each case, an “Indemnitee”) to the fullest extent permitted by law from and against any and all losses, claims, demands, costs, damages, liabilities (joint or several), expenses of any nature (including attorneys’ fees and disbursements), judgments, fines, settlements, and other amounts arising from any and all claims, demands, actions, suits, or proceedings, whether civil, criminal, administrative or investigative, in which the Indemnitee may be involved, or threatened to be involved as a party or otherwise, arising out of or incidental to the business or activities of or relating to the Company, regardless of whether the Indemnitee continues to be a Member or an officer of the Company at the time any such liability or expense is paid or incurred, but only if the Indemnitee’s course of conduct does not constitute willful misconduct; provided, however, that the foregoing shall not require the Company to indemnify any person in connection with any claim, action, suit, proceeding or counterclaim initiated by or on behalf of such person.

9. Distributions. The Member shall have the authority and discretion to determine from time to time the amount of cash and any other property that is available for distribution to the Member and may cause the Company to distribute such cash and property to the Member, subject to the Act or other applicable law.

10. Term. The Company shall dissolve and its affairs shall be wound up at the election of the Member or upon the occurrence of an event of dissolution under the Act; provided, however, that the Company shall not be dissolved upon the occurrence of an event of dissolution under the Act to the extent permitted under the Act.

11. Winding Up and Distribution Upon Dissolution. Upon dissolution of the Company, the Member shall wind up the business and affairs of the Company, and shall cause all property and assets of the Company to be distributed as follows, unless otherwise required by mandatory provisions of applicable law:

(a) first, all of the Company’s debts, liabilities, and obligations, including any loans or advances from the Member (to the extent otherwise permitted by law), shall be paid in full or reserves therefor shall be set aside; and

(b) any remaining assets shall be distributed to the Member.

12. Amendments. The Member at any time and from time to time may amend this Agreement by executing a written amendment.

13. Governing Law. This Agreement and the rights and obligations of the parties hereunder shall be governed by and interpreted, construed, and enforced in accordance with the laws of the State of Delaware without regard to the principles of conflicts of laws.

IN WITNESS WHEREOF, the Member has caused this Limited Liability Company Agreement to be duly executed on its behalf as of June , 2004.

	POWER TRANSMISSION HOLDING LLC


	By:	/s/ Thomas M. O’Brien
	Name: Thomas M. O’Brien
	Title: Senior Vice President, General Counsel and Secretary

Boston Gear LLC Agreement

EX-3.11 15 a2155511zex-3_11.htm EXHIBIT 3.11

Exhibit 3.11

STATE Of DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 03:30 PM 06/10/2002
020371812 - 3534967

CERTIFICATE OF FORMATION

SPRAG LLC

The undersigned, an authorized natural person, for the purpose of forming a limited liability company, under the provisions and subject to the requirements of the State of Delaware (particularly Chapter 18, Title 6 of the Delaware Code and the acts amendatory thereof and supplemental thereto, and known, identified and referred to as the “Delaware Limited Liability Company Act”), hereby certifies that:

1. NAME

The name of the limited liability company is Sprag LLC (the “LLC”).

2. REGISTERED OFFICE AND AGENT

The address of the registered office and the name and the address of the registered agent of the limited liability company required to be maintained under Section 18-104 of the Delaware Limited Liability Company Act are National Registered Agents, Inc., 9 E. Loockerman Street, Dover, Delaware 19901.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of Sprag LLC this 10th day of June, 2002.

	/s/ A. Lynne Puckett
	A. Lynne Puckett
	Authorized Person

STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED O9:00 AM 06/14/2002
020383053 - 3534967

CERTIFICATE OF AMENDMENT

SPRAG LLC

The undersigned, an authorized natural person, for the purpose of amending the Certificate of Formation of Sprag LLC, a Delaware limited liability company, pursuant to Section 18-202 of the Delaware Limited Liability Company Act, hereby certifies as follows:

1. Name of Limited Liability Company: Sprag LLC

2. The Certificate of Formation of the limited liability company is hereby amended as follows: The name of the limited liability company is changed to Formsprag LLC.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment of Sprag LLC this 14^th day of June, 2002.

	/s/ A. Lynne Puckett
	A. Lynne Puckett
	Authorized Person

	State of Delaware
	Secretary of State
	Division of Corporations
	Delivered 09:34 AM 08/22/2003
	FILED 08:33 AM 08/22/2003
	SRV 030547210 - 3534967 FILE

Certificate of Amendment to Certificate of Formation

FORMSPRAG LLC

It is hereby certified that:

1. The name of the limited liability company (hereinafter called the “limited liability company”) is

FORMSPRAG LLC

2. The certificate of formation of the limited liability company is hereby amended by striking out the statement relating to the limited liability company’s registered agent and registered office and by substituting in lieu thereof the following new statement:

“The address of the registered office and the name and the address of the registered agent of the limited liability company required to be maintained by Section 18-104 of the Delaware Limited Liability Company Act are Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808.”

Executed on August 22, 2003.

	/s/ Thomas M. O’Brien
	Name: Thomas M. O’Brien
	Title: Authorized Person

EX-3.12 16 a2155511zex-3_12.htm EXHIBIT 3.12

Exhibit 3.12

LIMITED LIABILITY COMPANY AGREEMENT

FORMSPRAG LLC

THIS LIMITED LIABILITY COMPANY AGREEMENT (the “Agreement”) is entered into as of June 14, 2002, by Ameridrives International, L.P., a Delaware limited partnership (“Ameridrives”), Warner Electric, Inc., a Delaware corporation (“Warner”), and any other persons or entities who shall in the future execute and deliver this Agreement pursuant to the provisions hereof shall hereinafter collectively be referred to as the “Members.”

WHEREAS, the Members have agreed to form a limited liability company under the name “Formsprag LLC” (the “LLC”), for the purposes hereinafter set forth, subject to the terms and conditions hereof, and has authorized A. Lynne Puckett as an authorized person to file a Certificate of Formation (the “Certificate”) to effect such formation pursuant to the provisions of the Delaware Limited Liability Company Act (the “Delaware LLC Act”). A Certificate of Formation (the “Certificate”), dated as of June 10, 2002 has been filed by A. Lynne Puckett as an authorized person to form a limited liability company under the name “Sprag LLC” pursuant to the provisions of the Delaware LLC Act and a Certificate of Amendment, dated as of June 14, 2002 (the “Amended Certificate”), has been filed by A. Lynne Puckett as an authorized person, to change the name of the LLC to “Formsprag LLC” pursuant to the provisions of the Delaware LLC Act; and

WHEREAS, by executing this Agreement, the Members hereby (i) ratify the formation of the LLC and the filing of the Certificate and the Amended Certificate, (ii) confirm and agree to the Members’ status as members of the LLC, and (iii) continue the existence of the LLC for the purposes hereinafter set forth, subject to the terms and conditions hereof.

NOW, THEREFORE, in consideration of the foregoing, and of the covenants and agreements hereinafter set forth, it is hereby agreed as follows:

1. CERTAIN DEFINITIONS

Unless the context otherwise specifies or requires, capitalized terms used herein shall have the respective meanings assigned thereto in Addendum I, attached hereto, and incorporated herein by reference, for all purposes of this Agreement (such definitions to be equally applicable to both the singular and the

plural forms of the terms defined). Unless otherwise specified, all references herein to Articles or Sections are to Articles or Sections of this Agreement.

2. FORMATION; NAME; PLACE OF BUSINESS

2.1. Formation of LLC; Certificate of Formation

The Members of the LLC hereby:

2.1.1. approve and ratify the filing of the Certificate with the Recording Office on June 10, 2002;

2.1.2. approve and ratify the filing of the Amended Certificate with the Recording Office on June 14, 2002;

2.1.3. confirm and agree to status as Members of the LLC;

2.1.4. execute this Agreement for the purpose of establishing the rights, duties and relationship of the Members;

2.1.5. (i) agree that if the laws of any jurisdiction in which the LLC transacts business so require, the appropriate officers or other authorized representatives of the LLC shall file, or shall cause to be filed, with the appropriate office in that jurisdiction, any documents necessary for the LLC to qualify to transact business under such laws; and (ii) agree and obligate themselves to execute, acknowledge and cause to be filed for record, in the place or places and manner prescribed by law, any amendments to the Certificate as may be required, either by the Delaware LLC Act, by the laws of any jurisdiction in which the LLC transacts business or by this Agreement, to reflect changes in the information contained therein or otherwise to comply with the requirements of law for the continuation, preservation and operation of the LLC as a limited liability company under the Delaware LLC Act; and

2.1.6. represent and warrant that the Members are duly authorized to execute, deliver and perform their obligations under this Agreement and that the Persons, if any, executing this Agreement on behalf of the Members are duly authorized to do so and that this Agreement is binding on and enforceable against the Members in accordance with its terms.

2.2. Name of LLC

The name under which the LLC shall conduct its business is “Formsprag LLC”. The business of the LLC may be conducted under any other name permitted by the Delaware LLC Act that is deemed necessary or desirable by the Members, in their sole and absolute discretion. The Members or the

appropriate officers or other authorized representatives of the LLC promptly shall execute, file and record, or cause to be executed, filed and recorded, any assumed or fictitious name certificates required by the laws of the State of Delaware or any state in which the LLC conducts business.

2.3. Place of Business

The location of the principal place of business of the LLC shall be 9211 Forest Hill Avenue, Suite 109, Richmond, Virginia 23235. The Members may hereafter change the principal place of business of the LLC to such other place or places within the United States as the Members may from time to time determine, provided that, if necessary, the Members shall amend, or shall cause to be amended, the Certificate in accordance with the applicable requirements of the Delaware LLC Act. The Members may establish and maintain such other offices and additional places of business of the LLC, either within or without the State of Delaware, as they deem appropriate.

2.4. Registered Office and Registered Agent

The street address of the initial registered office of the LLC shall be 9E Loockerman Street, Dover, Delaware 19901, and the LLC’s registered agent at such address shall be National Registered Agents, Inc. The registered office and the registered agent of the LLC may be changed by the Members from time to time in accordance with the then applicable provisions of the Delaware LLC Act and any other applicable laws.

3. PURPOSES AND POWERS OF LLC

3.1. Purposes

The purposes of the LLC shall be to engage in any lawful business permitted by the Delaware LLC Act or laws of any jurisdiction in which the LLC may do business and to enter into any lawful transaction and engage in any lawful activities in furtherance of the foregoing purposes and as may be necessary, incidental or convenient to carry out the business of the LLC as contemplated by this Agreement.

3.2. Powers

Subject to all of the provisions of this Agreement, the LLC shall have the power to do any and all acts and things necessary, appropriate, advisable or convenient for the furtherance and accomplishment of the purposes of the LLC, including, without limitation, to engage in any kind of activity and to enter into and

perform obligations of any kind necessary to or in connection with, or incidental to, the accomplishment of the purposes of the LLC, so long as said activities and obligations may be lawfully engaged in or performed by a limited liability company under the Delaware LLC Act.

4. TERM OF LLC

The existence of the LLC commenced on the date upon which the Certificate was duly filed with the Recording Office and shall continue until dissolved and liquidated in accordance with the provisions of Section 10.

5. CAPITAL

5.1. Capital Contributions, Percentage Interests and Units of Members

5.1.1. Capital Contributions

Each of the Members shall make the Capital Contribution set forth opposite such Member’s name in Exhibit A attached hereto and such Capital Contribution shall be effective as of June 14, 2002. Exhibit A shall be amended from time to time by the Members to the extent necessary to reflect accurately Capital Contributions. Except as otherwise provided in the Delaware LLC Act, the Members shall not be required to make any Capital Contributions to the LLC other than as set forth in this Section 5.1.

5.1.2. Percentage Interests

Each Member shall own an LLC Interest representing the Percentage Interest in the LLC as set forth opposite such Member’s name in Exhibit A.

5.1.3. Units

The membership interests in the LLC shall be divided into Units of Interest in the LLC (a “Unit”). Each Unit shall be identical in all respects with any other Unit, and shall represent the Member’s proportionate share in the net assets of the LLC. At the inception of the LLC, the value of each Unit shall be deemed to be ten dollars ($10.00) and, thereafter, the value of each Unit shall be determined by dividing the net value of the assets of the LLC in U.S. dollars as of such Valuation Date (the “Net Asset Value”), by the number of Units outstanding on such Valuation Date. For purposes of such valuation, the net value of the assets of the LLC shall equal the aggregate value of the assets of the LLC less the accrued liabilities incurred by or attributable to the LLC.

5.2. Capital Accounts

A separate Capital Account shall be established and maintained for each Member in all events in accordance with the Tax Allocations Addendum attached hereto as Addendum II and by this reference incorporated herein.

5.3. Negative Capital Accounts

Except to the extent the Members are required or elect to make contributions to the capital of the LLC under Section 5.1, no Member shall be required to pay to the LLC or to any other Member any deficit or negative balance which may exist from time to time in such Member’s Capital Account.

5.4. No Interest on Capital Contributions or Capital Accounts

No Member shall be entitled to receive any interest on its Capital Contributions or its outstanding Capital Account balance.

5.5. Advances to LLC

Members may advance funds to the LLC in excess of the amounts required hereunder to be contributed by them to the capital of the LLC only with the consent of the Members. Any such approved advances by a Member shall not result in any increase in the amount of such Member’s Capital Account or entitle it to any increase in the Percentage Interest represented by such Member’s LLC Interest. The amounts of such advances shall be a debt of the LLC to such Member and shall be payable or collectible only out of the LLC Assets in accordance with terms and conditions agreed upon by the Members.

5.6. Liability of Members

Except as otherwise provided in the Delaware LLC Act, the debts, obligations and liabilities of the LLC, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the LLC, and none of the Members shall be obligated personally for any such debt, obligation or liability of the LLC solely by reason of being a Member. The failure of the LLC to observe any formalities or requirements relating to the exercise of its powers or management of its business or affairs under the Delaware LLC Act or this Agreement shall not be grounds for imposing personal liability on any Member for liabilities of the LLC.

5.7. Return of Capital

Except upon the dissolution of the LLC or as may be specifically provided in this Agreement, no Member shall have the right to demand or to receive

the return of all or any part of its Capital Account or its Capital Contributions to the LLC.

6. ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS

6.1. Allocation of Net Income or Net Loss

The Net Income or Net Loss, other items of income, gains, losses, deductions and credits, and the taxable income, gains, losses, deductions, and credits of the LLC, if any, for each Fiscal Year (or portion thereof) shall be allocated to the Members as provided in the Tax Allocations Addendum.

6.2. Allocation of Income and Loss With Respect to LLC Interests Transferred

If any LLC Interest is transferred during any Fiscal Year, the Net Income or Net Loss (and other items referred to in Section 6.1) attributable to such LLC Interest for such Fiscal Year shall be allocated between the transferor and the transferee based on the number of days during such Fiscal Year for which each party was the owner of the LLC Interest transferred.

6.3. Distributions

6.3.1. Determination of Availability

Cash available or property available to be distributed in-kind by the LLC to the Members (“Distributions”) shall be determined for each Fiscal Year by the Members and shall be distributed to the Members in proportion to their Percentage Interests.

6.3.2. Distribution to Members

Distributions shall be distributed at least annually within seventy-five (75) days after the end of each Fiscal Year. Distributions also may be distributed, in the discretion of the Members, after retention of appropriate reserves, at other times during any Fiscal Year in anticipation of the year-end determination thereof, and such Distributions shall be subject to year-end adjustment. The Members agree that, within thirty (30) days after determination by the LLC that an overpayment was made to any Member for any Fiscal Year pursuant to this Section 6.3, such Member shall repay the overpayment unless the Members otherwise agree to allow such overpayment to be a credit against future Distributions, or make such other adjustments as the Members determine to be appropriate to remedy such overpayment.

7. MANAGEMENT

7.1. Meetings and Actions

7.1.1. Meetings

The Members may meet at least once each Fiscal Year at such place and time and on such date as may be fixed by the Members. Special meetings of the Members may be called by the President and shall be called by the President or Secretary upon the request of 75% (seventy five percent) of the Members upon ten (10) days’ notice to all Members in writing or by telephone or facsimile transmission. Meetings of the Members may be held by conference telephone or other communications equipment by means of which all participating Members can hear each other during the meeting.

7.1.2. Quorum

No action may be taken at a meeting of Members unless a quorum consisting of at least a Majority of the Members present.

7.1.3. Action by Written Consent

Any action which may be taken by the Members, or by any class of Members, under this Agreement may be taken without a meeting if consents in writing setting forth the action so taken are signed by Members who own LLC Interests having voting power to cast not less than the minimum number of votes necessary for such action to be taken by the Members, or such class of Members. All Members who do not participate in taking the action by written consent shall be given written notice thereof by the Secretary of the LLC promptly after such action has been taken.

7.1.4. Voting Rights; Required Vote

Each Member shall be entitled to vote the Percentage Interest represented by such Member’s LLC Interest with respect to any action required or permitted to be taken by the Members under this Agreement. Except as otherwise expressly provided in this Agreement, any action required or permitted to be taken by the Members must be approved by the affirmative vote of a Majority of the Members entitled to vote thereon.

7.1.5. Waivers of Notice

Whenever the giving of any notice to Members is required by statute or this Agreement, a waiver thereof, in writing and delivered to the LLC signed by the Person or Persons entitled to said notice, whether before or after the event as to which such notice is required, shall be deemed equivalent to notice.

Attendance of a Member at a meeting or execution of a written consent to any action shall constitute a waiver of notice of such meeting or action.

7.2. Management by Members

The Members, exclusively in their membership capacity (acting on behalf of the LLC), shall have the right, power and authority, to manage, operate and control the business and affairs of the LLC and to do or cause to be done any and all acts, at the expense of the LLC, deemed by the Members to be necessary or appropriate to effectuate the purposes of the LLC, including without limitation the right, power and authority on behalf of the LLC:

(i) to develop, review and approve annual budgets, policies, operating guidelines and other key operational items for the LLC;

(ii) to elect officers of the LLC in accordance with Section 7.3;

(iii) to arrange for such personnel as may be necessary or convenient to carry out the business and affairs of the LLC;

(iv) to establish such reasonable cash reserves to provide for anticipated expenses of the LLC as the Members determine to be necessary for timely payment of such expenses; and

(v) to direct the President or any other duly appointed officer of the LLC to make, execute, assign, acknowledge and file on behalf of the LLC any and all documents or instruments of any kind which the Members may deem necessary or appropriate in carrying out the business and affairs of the LLC (and the signature of any Member shall be sufficient to evidence the taking of any such action by the Members), including, without limitation, powers of attorney, agreements of indemnification, documents or instruments of any kind or character, and amendments thereto (and no person, firm or corporation dealing with the Members shall be required to determine or inquire into the authority or power of the Members to bind the LLC or to execute, acknowledge or deliver any and all documents in connection therewith).

7.3. Officers

7.3.1. Number, Election and Term of Office

The officers of the LLC shall be a President, Vice President(s), a Treasurer and a Secretary, and may at the discretion of the Members include additional Vice Presidents, and one or more Assistant Secretaries and other officers. The initial officers shall be John A. Young, President; William Flexon, Vice

President; Thomas M. O’Brien, Secretary; and Scott Faison, Treasurer, who shall hold these offices until their successors are duly elected and qualified. The officers of the LLC subsequently shall be elected annually by the Members at the first meeting of Members held during each Fiscal Year and shall hold their respective offices until their successors are duly elected and have qualified or until their earlier death, resignation or removal. Except as otherwise provided by law, any number of offices may be held by the same person.

7.3.2. President

Subject to the direction of the Members, the President (i) shall be the chief operating officer of the LLC, (ii) shall have full responsibility and authority for management of the day-to-day operations of the LLC and (iii) may execute agreements and contracts on behalf of the LLC.

7.3.3. Treasurer

The Treasurer shall have charge of the funds of the LLC. The Treasurer shall keep full and accurate accounts of all receipts and disbursements of the LLC in books belonging to the LLC and shall deposit all monies and other valuable effects in the name and to the credit of the LLC in such depositories as may be designated by the Members. The Treasurer shall disburse the funds of the LLC as may be ordered by the Members, and shall render to the Members, whenever they may require it, an account of all his or her transactions as Treasurer and an account of the business and financial position of the LLC.

7.3.4. Secretary

The Secretary, at the direction of the Members, shall prepare and distribute to the Members an agenda in advance of each meeting and shall prepare and distribute promptly to each Member written minutes of all meetings of the Members. The Secretary shall also be responsible for preparing and distributing to the Members any notices received by the LLC or otherwise called for by this Agreement to be given by the LLC.

7.3.5. Vice President

The Members may appoint one or more Vice Presidents of the LLC. Each Vice President shall perform such duties as the Members shall require of such Vice President. The Vice Presidents (in the order of their election) shall, during the absence or incapacity of the President, assume and perform the duties of the President. Each Vice President may execute agreements and contracts on behalf of the LLC.

7.3.6. Assistant Secretary

The Members may appoint one or more Assistant Secretaries of the LLC. Each Assistant Secretary shall perform such duties as Members shall require of such Assistant Secretary. The Assistant Secretaries (in the order of their election) shall, during the absence or incapacity of the Secretary, assume and perform all functions and duties which the Secretary might lawfully do if present and not under any incapacity.

7.3.7. Other Officers

The Members may appoint such other officers and agents of the LLC as the Members shall deem necessary or appropriate to carry out the business of the LLC upon such terms and conditions the Members may determine. Any such officer shall hold his or her respective office for the term specified by the Members unless earlier removed by the Members.

7.3.8. Resignation

Any officer or agent of the LLC may resign at any time by giving written notice to the Members or to the President or the Secretary of the LLC. Any such resignation shall take effect at the time specified therein or, if no time is specified, upon receipt thereof; and unless otherwise specified therein, acceptance of such resignation shall not be necessary to make it effective.

7.3.9. Removal; Vacancies; Transfer of Duties

Any officer or agent of the LLC may be removed from office, with or without cause, by the Members at a meeting called for that purpose. Any vacancy in the office of President, Treasurer or Secretary for any reason shall be filled by a person designated by the Members for the unexpired term of the vacant office. The Members in their sole and absolute discretion may transfer the power and duties, in whole or in part, of any officer to any other officer, or persons, notwithstanding the provisions of this Agreement, except as otherwise provided by the laws of the State of Delaware.

7.3.10. Compensation

The officers of the LLC shall be entitled to such salary or other compensation as the Members shall determine.

7.3.11. Third Party Reliance

Third parties dealing with the LLC shall be entitled to rely conclusively upon the power and authority of the officers of the LLC as set forth herein.

7.4. Fiduciary Relationship

No Member shall be liable to the LLC or the other Members for monetary damages for breach of fiduciary duty as a Member or otherwise liable, responsible or accountable to the LLC or its Members for monetary damages or otherwise for any acts performed, or for any failure to act; provided; however, that this provision shall not eliminate or limit the liability of a Member (i) for any breach of the Member’s duty of loyalty to the LLC or its other Members, (ii) for acts or omissions which involve intentional misconduct or a knowing violation of law, or (iii) for any transaction from which the Member received any improper personal benefit.

7.5. Reimbursement

Notwithstanding anything to the contrary in this Agreement, the Members shall be entitled to reimbursement from the LLC for the following expenses incurred by them which are attributable to the organization, operation and management of the LLC, only as approved by the President or Vice President(s).

7.6. Other Activities of Members or Affiliates

Any Member or any Affiliate thereof may have other business interests and may engage in other business ventures of any nature or description whatsoever, whether currently existing or hereafter created. No Member or Affiliate thereof shall incur any liability to the LLC as a result of such Member’s or Affiliate’s pursuit of such other business interests, ventures and competitive activity, and neither the LLC nor the other Members shall have any right to participate in such other business ventures or to receive or share in any income or profits derived therefrom.

7.7. Certain Transactions

Subject to Section 5.5, the LLC is expressly permitted in the normal course of its business to enter into transactions with any or all Members or with any Affiliate of any or all Members provided that the price and other terms of such transactions are fair to the LLC and that the price and other terms of such transactions are not less favorable to the LLC than those generally prevailing with respect to comparable transactions between unrelated parties.

7.8. Indemnification of the Members, Officers and any Affiliates

7.8.1 The LLC shall indemnify and hold harmless any Member and any officer, or Affiliate thereof (individually, in each case, an “Indemnitee”) to

the fullest extent permitted by law from and against any and all losses, claims, demands, costs, damages, liabilities (joint or several), expenses of any nature (including attorneys’ fees and disbursements), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, in which the Indemnitee may be involved, or threatened to be involved, as a party or otherwise, arising out of or incidental to the business or activities of or relating to the LLC, regardless of whether the Indemnitee continues to be a Member, officer, director, or Affiliate thereof at the time any such liability or expense is paid or incurred; provided, however, that this provision shall not eliminate or limit the liability of an Indemnitee (i) for any breach of the Indemnitee’s duty of loyalty to the LLC or its Members, (ii) for acts or omissions which involve intentional misconduct or a knowing violation of law, or (iii) for any transaction from which the Indemnitee received any improper personal benefit.

7.8.2. Expenses incurred by an Indemnitee in defending any claim, demand, action, suit, or proceeding subject to this Section 7.8 shall, from time to time, upon request by the Indemnitee be advanced by the LLC prior to the final disposition of such claim, demand, action, suit, or proceeding upon receipt by the LLC of an undertaking by or on behalf of the Indemnitee to repay such amount, if it shall be determined in a judicial proceeding or a binding arbitration that such Indemnitee is not entitled to be indemnified as authorized in this Section 7.8.

7.8.3. The indemnification provided by this Section 7.8 shall be in addition to any other rights to which an Indemnitee may be entitled under any agreement, vote of the Members, as a matter of law or equity, or otherwise, both as to an action in the Indemnitee’s capacity as a Member, officer or Affiliate thereof, and as to an action in another capacity, and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee.

7.8.4. The LLC may purchase and maintain insurance on behalf of the Members and such other Persons as the Members shall determine against any liability that may be asserted against or expense that may be incurred by such Persons in connection with the offering of interests in the LLC or the business or activities of the LLC, regardless of whether the LLC would have the power to indemnify such Persons against such liability under the provisions of this Agreement.

7.8.5. An Indemnitee shall not be denied indemnification in whole or in part under this Section 7.8 or otherwise by reason of the fact that the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted or not expressly prohibited by the terms of this Agreement.

7.8.6. The provisions of this Section 7.8 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons.

8. BANK ACCOUNTS; BOOKS AND RECORDS; STATEMENTS; TAXES; FISCAL YEAR

8.1. Bank Accounts

All funds of the LLC shall be deposited in its name in such checking and savings accounts, time deposits or certificates of deposit, or other accounts at such banks as shall be designated by the Members from time to time, and the Members shall arrange for the appropriate conduct of such account or accounts.

8.2. Books and Records

The Members shall keep, or cause to be kept, accurate, full and complete books and accounts showing assets, liabilities, income, operations, transactions and the financial condition of the LLC. Such books and accounts shall be prepared on the accrual basis of accounting. Any Member, or its respective designee, shall have access thereto at any reasonable time during regular business hours and shall have the right to copy said records at its expense.

8.3. Financial Statements and Information

8.3.1. All financial statements prepared pursuant to this Section 8.3 shall present fairly the financial position and operating results of the LLC and shall be prepared in accordance with generally accepted accounting principles on the accrual basis as provided in Section 8.2 for each Fiscal Year of the LLC during the term of this Agreement.

8.3.2. Within thirty (30) days after the end of each quarterly period (the “Fiscal Quarter”) of each Fiscal Year, commencing with the first full Fiscal Quarter after the date of this Agreement, the President shall prepare and submit or cause to be prepared and submitted to the Members an unaudited statement of profit and loss for the LLC for such Fiscal Quarter and an unaudited balance sheet of the LLC dated as of the end of such Fiscal Quarter, in each case prepared in accordance with generally accepted accounting principles consistently applied (subject to normal year-end adjustments).

8.3.3. Within sixty (60) days after the end of each Fiscal Year during the term of this Agreement, the President shall prepare and submit or cause to be prepared and submitted to the Members (i) an unaudited balance sheet, together with unaudited statements of profit and loss, Members’ equity and changes

in financial position for the LLC during such Fiscal Year; (ii) a report of the activities of the LLC during the Fiscal Year; (iii) a report summarizing the fees and other remuneration paid by the LLC for such Fiscal Year to the Members and any Affiliates thereof; and (iv) an unaudited statement showing any amounts distributed to the Members in respect of such Fiscal Year.

8.3.4 The President shall provide to the Members such other reports and information concerning the business and affairs of the LLC as may be required by the Delaware LLC Act or by any other law or regulation of any regulatory body applicable to the LLC.

8.4. Accounting Decisions

All decisions as to accounting matters, except as specifically provided to the contrary herein, shall be made by the President.

8.5. Where Maintained

The books, accounts and records of the LLC at all times shall be maintained at the LLC’s principal office or such other office or offices as the President shall determine.

8.6. Tax Returns; Tax Matters Partner

8.6.1. The President shall, at the expense of the LLC, cause to be prepared and delivered to the Members, in a timely fashion after the end of each Fiscal Year, copies of all federal and state income tax returns for the LLC for such Fiscal Year, one copy of which shall be timely filed with the appropriate tax authorities. Such returns shall accurately reflect the results of operations of the LLC for such Fiscal Year.

8.6.2. The Members shall appoint a Member as the “tax matters partner” (as defined in the Code) of the LLC who is authorized and required to represent the LLC (at the expense of the LLC) in connection with all examinations of the affairs of the LLC by any federal, state, or local tax authorities including any resulting administrative and judicial proceedings, and to expend funds of the LLC for professional services and costs associated therewith. The “tax matters partner” shall keep all Members fully informed of the progress of any such examination, audit or other proceeding, and any Member with a Percentage Interest of at least 10% (and any person that was a Member with a Percentage Interest of at least 10% in the year to which such examination, audit or other proceeding relates) shall have the right to participate in such examination, audit or other proceeding. Each Member and former Member agrees to cooperate with the “tax matters partner” and to do or refrain from doing any or all things reasonably required by the President in connection with the conduct of such proceedings.

8.7. Fiscal Year

The fiscal year of the LLC for financial, accounting, Federal, state and local income tax purposes shall initially end on December 31 (the “Fiscal Year”). The Members shall have authority to change the beginning and ending dates of the Fiscal Year if the Members deem such change to be necessary or appropriate to the business of the LLC.

9. TRANSFER AND CONVERSION OF LLC INTERESTS AND THE ADDITION, SUBSTITUTION AND WITHDRAWAL OF MEMBERS

9.1. Transfer of LLC Interests

9.1.1. The term “transfer”, when used in this Section 9 with respect to an LLC Interest, shall include any sale, assignment, gift, pledge, hypothecation, mortgage, exchange, or other disposition, except that such term shall not include any pledge, mortgage or hypothecation of or granting of a security interest in an LLC Interest in connection with any financing obtained on behalf of the LLC or any pledge, mortgage or hypothecation of or granting of a security interest in an LLC Interest between Members.

9.1.2. No LLC Interest shall be transferred, in whole or in part, except in accordance with the terms and conditions set forth in Section 9.2. Any transfer or purported transfer of any LLC Interest not made in accordance with Section 9.2 shall be void ab initio.

9.2. Restrictions on Transfers

9.2.1. No Member may transfer all or any portion of its LLC Interest without the express written consent of the other Members, provided, however, an LLC Interest may be transferred, in whole or in part, by any Member to an Affiliate of such Member. Without any further action by the assignor, Member or assignee of the LLC Interest, the assignee of the Member’s LLC Interest shall be admitted as a Member of the Company and thereafter be deemed a Member for all purposes under this Agreement, and the assignor, if it has assigned all of its LLC Interest in the Company, shall be withdrawn as a Member of the Company shall have no further powers, rights, and privileges as a Member hereunder except as provided in Section 7.8 and Section 8.6.2.

9.2.2. The LLC, each Member, the officers and any other person or persons having business with the LLC need deal only with Members who are admitted as Members or as substituted Members of the LLC, and they shall not be required to deal with any other person by reason of transfer by a Member or by reason of the death of a Member, except as otherwise provided in this Agreement.

In the absence of the substitution (as provided herein) of a Member for a transferring or a deceased Member, any payment to a Member or to a Member’s executors or administrators shall acquit the LLC of all liability to any other persons who may be interested in such payment by reason of an assignment by, or the death of, such Member.

9.3. No Right to Withdraw

No Member shall have any right to resign, retire or otherwise withdraw from the LLC without the express prior approval of all of the other Members.

10. DISSOLUTION AND LIQUIDATION

10.1. Events Causing Dissolution

Subject to the provisions of Section 10.2 below, LLC shall be dissolved and its affairs wound up upon the occurrence of any of the following events:

10.1.1. The consent in writing to dissolve and wind up the affairs of the LLC by all of the Members;

10.1.2. The sale or other disposition by the LLC of all or substantially all of the LLC Assets and the collection of all amounts derived from any such sale or other disposition, including all amounts payable to the LLC under any promissory notes or other evidences of indebtedness taken by the LLC (unless the Members shall elect to distribute such indebtedness to the Members in liquidation), and the satisfaction of contingent liabilities of the LLC in connection with such sale or other disposition; or

10.1.3. The occurrence of any other event that, under the Delaware LLC Act, would cause the dissolution of the LLC or that would make it unlawful for the business of the LLC to be continued.

10.2. Right to Continue Business of LLC

Upon an event described in Section 10.1.3., the LLC thereafter shall be dissolved and liquidated unless, within 90 days after the event described in any of such Sections, an election to continue the business of the LLC shall be made in writing by the remaining Members holding a majority of the LLC Interests held by the remaining Members; provided, however, that no such election may be made in the case of an event described in Section 10.1.3. that makes it unlawful for the business of the LLC to be continued. If such an election to continue the LLC is

made, then the LLC shall continue until another event causing dissolution in accordance with this Section 10 shall occur.

10.3. Cancellation of Certificate

Upon the dissolution and completion of winding up of the LLC, the Certificate shall be canceled in accordance with the provisions of Section 18-203 of the Delaware LLC Act and a Member (or any other person or entity responsible for winding up the affairs of the LLC) shall promptly notify the Members of such dissolution.

10.4. Distributions Upon Dissolution

10.4.1. Upon the dissolution of the LLC, the President (or any other person or entity responsible for winding up the affairs of the LLC) shall proceed without any unnecessary delay to sell or otherwise liquidate the LLC Assets and pay or make due provision for the payment of all debts, liabilities and obligations of the LLC.

10.4.2. The President (or any other person or entity responsible for winding up the affairs of the LLC) shall distribute the net liquidation proceeds and any other liquid assets of the LLC after the payment of all debts, liabilities and obligations of the LLC (including, without limitation, all amounts owing to a Member under this Agreement or under any agreement between the LLC and a Member entered into by the Member other than in its capacity as a Member in the LLC), the payment of expenses of liquidation of the LLC, and the establishment of a reasonable reserve in an amount estimated by the President to be sufficient to pay any amounts reasonably anticipated to be required to be paid by the LLC, which shall be distributed to the Members first, pro rata, in proportion to the positive balances, if any, in their respective Capital Accounts until such Capital Accounts are reduced to zero amounts, and, second, the remaining LLC Assets, if any, shall be distributed to the Members, pro rata, in accordance with their respective Percentage Interests.

10.5. Reasonable Time for Winding Up

A reasonable time shall be allowed for the orderly winding up of the business and affairs of the LLC and the liquidation of its assets pursuant to Section 10.4 in order to minimize any losses otherwise attendant upon such a winding up.

11. MISCELLANEOUS PROVISIONS

11.1. Compliance with Delaware LLC Act

Each Member agrees not to take any action or fail to take any action which, considered alone or in the aggregate with other actions or events, would result in the termination of the LLC under the Delaware LLC Act.

11.2. Additional Actions and Documents

Each of the Members hereby agrees to take or cause to be taken such further actions, to execute, acknowledge, deliver and file or cause to be executed, acknowledged, delivered and filed such further documents and instruments, and to use best efforts to obtain such consents, as may be necessary or as may be reasonably requested in order to fully effectuate the purposes, terms and conditions of this Agreement, whether before, at or after the closing of the transactions contemplated by this Agreement.

11.3. Notices

All notices, demands, requests or other communications which may be or are required to be given, served, or sent by a Member pursuant to this Agreement shall be in writing and shall be hand delivered (including delivery by courier), mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, delivered via nationally recognized overnight courier or transmitted by telegram, telex or facsimile transmission, addressed as:

(i) If to Ameridrives International, L.P.:

American Enterprises MPT Corp.
9211 Forest Hill Avenue
Suite 109
Richmond, VA 23235
Facsimile: (804) 560-4076

with a copy (which shall not
constitute notice) to:

Thomas M. O’Brien
Colfax Corporation
997 Lenox Drive
Suite 111
Lawrenceville, New Jersey 08648
Facsimile: (609) 896-7633

and

Hogan & Hartson LLP
111 South Calvert Street
Suite 1600
Baltimore, MD 21202-6191
Attention: Michael J. Silver
Facsimile: (410) 539-6981

(ii) If to Warner Electric, Inc.:

Warner Electric, Inc.
9211 Forest Hill Avenue
Suite 109
Richmond, VA 23235
Facsimile: (804) 560-4076

with a copy (which shall not
constitute notice) to:

Thomas M. O’Brien
Colfax Corporation
997 Lenox Drive
Suite 111
Lawrenceville, New Jersey 08648
Facsimile: (609) 896-7633

and

Hogan & Hartson LLP
111 South Calvert Street
Suite 1600

Baltimore, MD 21202-6191
Attention: Michael J. Silver
Facsimile: (410) 539-6981

Each Member may designate by notice in writing a new address to which any notice, demand, request or communication may thereafter be so given; served or sent. Each notice, demand, request or communication which shall be delivered, mailed or transmitted in the manner described above shall be deemed sufficiently given, served, sent or received for all purposes at such time as it is delivered to the addressee (with an affidavit of personal delivery, the return receipt, the delivery receipt, or (with respect to a facsimile) the answer back being deemed conclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation.

11.4. Severability

The invalidity of any one or more provisions hereof or of any other agreement or instrument given pursuant to or in connection with this Agreement shall not affect the remaining portions of this Agreement or any such other agreement or instrument or any part thereof, all of which are inserted conditionally on their being held valid in law; and in the event that one or more of the provisions contained herein or therein should be invalid, or should operate to render this Agreement or any such other agreement or instrument invalid, this Agreement and such other agreements and instruments shall be construed as if such invalid provisions had not been inserted.

11.5. Survival

It is the express intention and agreement of the Members that all covenants, agreements, statements, representations, warranties and indemnities made in this Agreement shall survive the execution and delivery of this Agreement.

11.6. Waivers

Neither the waiver by the LLC or a Member of a breach of or a default under any of the provisions of this Agreement, nor the failure of the LLC or a Member, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right, remedy or privilege hereunder, shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver of any such provisions, rights, remedies or privileges hereunder.

11.7. Exercise of Rights

No failure or delay on the part of a Member or the LLC in exercising any right, power or privilege hereunder and no course of dealing between the Members or between a Member and the LLC shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein expressly provided are cumulative and not exclusive of any other rights or remedies which a Member or the LLC would otherwise have at law or in equity or otherwise.

11.8. Binding Effect

Subject to any provisions hereof restricting assignment, this Agreement shall be binding upon and shall inure to the benefit of the Members and their respective heirs, devises, executors, administrators, legal representatives, successors and assigns.

11.9. Limitation on Benefits of this Agreement

Subject to Section 7.8 and Section 8.6(b), it is the explicit intention of the Members that no person or entity other than the Members and the LLC is or shall be entitled to bring any action to enforce any provision of this Agreement against any Member or the LLC, and that the covenants, undertakings and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, the Members (or their respective successors and assigns as permitted hereunder), and the LLC.

11.10. Amendment Procedure

Amendments to Exhibit A to reflect actions taken pursuant to Section 5.2 and Section 5.3 may be made by the President. Any other amendment or modification to this Agreement may be made only upon the written consent of all Members.

11.11. Entire Agreement

This Agreement (including the Schedules hereto) contains the entire agreement between the Members with respect to the matters contemplated herein, and supersedes all prior oral or written agreements, commitments or understandings with respect to the matters provided for herein and therein.

11.12. Pronouns

All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or entity may require.

11.13. Headings

Section and subsection headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.

11.14. Governing Law

This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of Delaware (but not including the choice of law rules thereof).

11.15. Execution in Counterparts

To facilitate execution, this Agreement may be executed in as many counterparts as may be required; and it shall not be necessary that the signatures of, or on behalf of, each party, or that the signatures of all persons required to bind any party, appear on each counterpart; but it shall be sufficient that the signature of, or on behalf of, each party, or that the signatures of the persons required to bind any party, appear on one or more of the counterparts. All counterparts shall collectively constitute a single agreement. It shall not be necessary in making proof of this Agreement to produce or account for more than a number of counterparts containing the respective signatures of, or on behalf of, all of the parties hereto.

IN WITNESS WHEREOF, the undersigned has duly executed this Limited Liability Company Agreement, or has caused this Limited Liability Company Agreement to be duly executed on their behalf, as of the day and year first hereinabove set forth.

	Ameridrives International, L.P.

	By:	American Enterprises MPT Corp.
	Its General Partner

	By:	/s/ Thomas M. O’Brien
	Name: Thomas M. O’Brien
	Title: Sr. V. P.

	Warner Electric, Inc.

	By:	/s/ Thomas M. O’Brien
	Name: Thomas M. O’Brien
	Title: Sr. V. P.

Exhibit A

Name	Percentage of Interest		Capital Contribution		Number of Units Issued

Ameridrives International, L.P.	70	%	$	6,030,000	603,000

Warner Electric, Inc.	30	%	$	2,584,286	258,429

FIRST AMENDMENT TO THE

LIMITED LIABILITY COMPANY AGREEMENT

FORMSPRAG, LLC

THIS FIRST AMENDMENT (the “Amendment) to the Limited Liability Company Agreement (the “Agreement”) of Formsprag LLC, a Delaware limited liability company (the “LLC”), dated as of June 14, 2002 is entered into as of June 30, 2004, by Ameridrives International, L.P., a Delaware limited partnership (“Ameridrives”), and Warner Electric, Inc., a Delaware corporation (“Warner” and together with Ameridrives, the “Members”).

WHEREAS, the Members desire to amend the Agreement as set forth herein and the Members desire to reaffirm Exhibit A of the Agreement, in the form attached hereto as Exhibit A (the “Exhibit A”).

NOW, THEREFORE, in consideration of the foregoing, and of the covenants and agreements hereafter set forth, it is agreement as follows:

1. The first sentence of Subsection 5.1.3 of the Agreement is hereby deleted and replaced in its entirety with the following:

“The member interests in the LLC shall be divided into Units of Interest in the LLC (a “Unit”) and such Units shall be securities governed by Article 8 of the Delaware Uniform Commercial Code.”

2. The Members hereby ratify and reaffirm Exhibit A to the Agreement.

IN WITNESS WHEREOF, the Member has caused this Limited Liability Company Agreement to be duly executed on its behalf as of June 30, 2004.

		AMERIDRIVES INTERNATIONAL, L.P.

		By:	/s/ Thomas M. O’Brien
		Name: Thomas M. O’Brien
		Title: Senior Vice President, General
		Counsel and Secretary


		WARNER ELECTRIC, INC.

		By:	/s/ Thomas M. O’Brien
		Name: Thomas M. O’Brien
		Title: Senior Vice President, General
		Counsel and Secretary

Exhibit A

Name	Percentage of Interest		Capital Contribution		Number of Units Issued

Ameridrives International, L.P.	30	%	$	6,699,000	258,429

Warner Electric, Inc.	70	%	$	15,631,000	603,000

EX-3.13 17 a2155511zex-3_13.htm EXHIBIT 3.13

Exhibit 3.13

THE KILIAN COMPANY

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

The Kilian Company, a corporation organized and existing under and by virtue of the Delaware General Corporation Law, hereby certifies as follows:

IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation has been signed this 8^th day of October, 2004.

	THE KILIAN COMPANY


	By:	/s/ Michael L. Hurt
		Michael L. Hurt, Chief Executive Officer

Exhibit A

THE KILIAN COMPANY

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

The name of this corporation is The Kilian Company.

The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of Delaware.

The address of its registered office in the State of Delaware is 9 East Loockerman Street, Suite 1B, in the City of Dover, County of Kent, 19901. The name of its registered agent at such address is National Registered Agents, Inc.

Notwithstanding the provisions of Section 242(b)(2) of the Delaware General Corporation Law, the number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of a majority of the outstanding shares of capital stock of this corporation, with each such share being entitled to such number of votes per share as is provided for in Section 5 below.

The holders of shares of Series A Preferred Stock shall be entitled to receive dividends, out of any assets legally available therefor, prior and in preference to any declaration or payment of any dividend (payable other than in Common Stock or other securities and rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock of this corporation) on the Common Stock of this corporation, at the rate of $8.00 per share (as adjusted for stock splits, combinations, reorganizations and the like with respect to the Series A Preferred) per annum on each outstanding share of Series A Preferred Stock, payable quarterly when, as and if declared by the board of directors. Dividends shall be cumulative and shall accrue whether or not declared, beginning on the date hereof. No dividends other than those payable solely in Common Stock shall be paid on any Common Stock unless and until (i) the aforementioned dividend is paid on each outstanding share of Series A Preferred Stock, and (ii) a dividend is paid with respect to all outstanding shares of Series A Preferred Stock in an amount equal to or greater than the aggregate amount of dividends which would be payable to the holder of Series A Preferred Stock if, immediately prior to such dividend payment on Common Stock, such share of Series A Preferred Stock had been converted into Common Stock. The board of directors of this corporation is under no obligation to declare dividends, no rights shall accrue to the holders of Series A Preferred Stock if dividends are not declared. The Company shall make no Distribution (as defined below) to the holders of shares of Common Stock except in accordance with this Section 1(a).

(b) Distribution. “Distribution” means the transfer of cash or property without consideration, whether by way of dividend or otherwise, or the purchase of shares of this corporation (other than in connection with the repurchase of shares of Common Stock issued to or held by employees, consultants, officers or directors upon termination of their employment or services pursuant to agreements providing for the right of said repurchase on terms and conditions, or pursuant to an agreement approved by, holders of an aggregate of more than 50% of the then outstanding shares of the Series A Preferred Stock) for cash or property.

(iii) Adjustments for Recapitalization, Reorganization, Merger, Consolidation or Sale of Assets. If the Common Stock issuable upon conversion of the Series A Preferred Stock shall be changed into the same or a different number of shares of any other class or classes of stock, whether by a recapitalization, reorganization, merger or consolidation of this corporation with or into another entity, or the sale of all or substantially all of this corporation’s properties and assets to any other person or entity (other than as provided for elsewhere in this Section 4 or a transaction subject to Section 2 above) then, as a part of such recapitalization, reorganization, merger, consolidation or sale, provision shall be made so that the holders of Series A Preferred Stock shall thereafter be entitled to receive upon conversion of the then outstanding Series A Preferred Stock, the number of shares of stock or other securities or property of this corporation, or of the successor entity resulting from such recapitalization, reorganization, merger, consolidation or sale, to which a holder of Common Stock deliverable upon conversion would have been entitled on such recapitalization, reorganization, merger, consolidation or sale. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 4 with respect to the rights of the holders of the then outstanding Series A Preferred Stock after the recapitalization, reorganization, merger, consolidation or sale to the end that the provisions of this Section 4 (including adjustments of the applicable Conversion Price then in effect and the number of shares purchasable upon conversion of the Series A Preferred Stock) shall be applicable after that event as nearly equivalent as may be practicable.

(1) The issuance of Common Stock upon the conversion of any then-outstanding Convertible Securities, provided there shall have been adjustment pursuant to paragraph (A), if applicable, in connection with the issuance of such Convertible Securities. “Convertible Securities” shall mean any bonds, debentures, notes or other evidences of indebtedness, and any warrants, shares (including, without limitation, shares of Series A Preferred Stock) or any other securities convertible into, exercisable for, or exchangeable for Common Stock.

(2) The issuance of any Common Stock or Convertible Securities as a dividend on this corporation’s stock.

(3) The issuance of shares of Common Stock (or options to purchase shares of Common Stock) to employees, directors or consultants of this corporation under a stock plan approved by the board of directors of this corporation pursuant to an arrangement approved by this corporation’s board of directors.

(4) The issuance of shares of Common Stock or Convertible Securities to lenders, financial institutions, equipment lessors, or real estate lessors to this corporation in connection with a bona fide borrowing or leasing transaction approved by this corporation’s board of directors.

(5) The issuance of Common Stock or Convertible Securities pursuant to the acquisition of another business by this corporation by merger, purchase of substantially all of the assets or shares, or other reorganization whereby this corporation or its stockholders own not less than a majority of the voting power of the surviving or successor business.

(1) In case at any time this corporation shall grant any rights to subscribe for, or any rights or options to purchase, Convertible Securities, whether or not such rights or options or the right to convert or exchange any such Convertible Securities are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such rights or options or upon conversion or exchange of such Convertible Securities (determined by dividing (x) the total amount, if any, received or receivable by this corporation as consideration for the granting of such rights or options, plus the minimum aggregate amount of additional consideration payable to this corporation upon the exercise of such rights or options, plus, in the case of any such rights or options which relate to such Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable upon the issue or sale of such Convertible Securities and upon the conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the exercise of such rights or

options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such rights or options) shall be less than the Conversion Price in effect immediately prior to the time of the granting of such rights or options, then the total maximum number of shares of Common Stock issuable upon the exercise of such rights or options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such rights or options shall (as of the date of granting of such rights or options) be deemed to be outstanding and to have been issued for such price per share.

(2) In case at any time this corporation shall issue or sell any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange (determined by dividing (x) the total amount received or receivable by this corporation as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to this corporation upon the conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities) shall be less than the Conversion Price in effect immediately prior to the time of such issue or sale, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities shall (as of the date of the issue or sale of such Convertible Securities) be deemed to be outstanding and to have been issued for such price per share, provided that if any such issue or sale of such Convertible Securities is made upon exercise of any rights to subscribe for or to purchase or any option to purchase any such Convertible Securities for which adjustments of the conversion price have been or are to be made pursuant to other provisions of this paragraph (C), no further adjustment of the conversion price shall be made by reason of such issue or sale.

(3) In case at any time any shares of Common Stock or Convertible Securities or any rights or options to purchase any such Common Stock, or Convertible Securities shall be issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by this corporation therefor. In case any shares of Common Stock or Convertible Securities or any rights or options to purchase any such Common Stock or Convertible Securities shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by this corporation shall be deemed to be the fair value of such consideration as determined by the board of directors. In case any shares of Common Stock or Convertible Securities or any rights or options to purchase any such Common Stock or Convertible Securities shall be issued in connection with any merger of another corporation into this corporation, the amount of consideration therefor shall be deemed to be the fair value of the assets of such merged corporation as determined by the board of directors after deducting therefrom all cash and other consideration (if any) paid by this corporation in connection with such merger.

The board of directors shall have the power to adopt, amend and repeal the bylaws of this corporation (except insofar as the bylaws of this corporation as adopted by action of the stockholders of this corporation shall otherwise provide). Any bylaws made by the

directors under the powers conferred hereby may be amended or repealed by the directors or by the stockholders, and the powers conferred in this Article V shall not abrogate the right of the stockholders to adopt, amend and repeal bylaws.

Election of directors need not be by written ballot unless the bylaws of this corporation shall so provide.

This corporation reserves the right to amend the provisions in this Amended and Restated Certificate of Incorporation and in any certificate amendatory hereof in the manner now or hereafter prescribed by law, and all rights conferred on stockholders or others hereunder or thereunder are granted subject to such reservation.

EX-3.14 18 a2155511zex-3_14.htm EXHIBIT 3.14

Exhibit 3.14

BYLAWS

THE KILIAN COMPANY

ARTICLE I

OFFICES

Section 1. REGISTERED OFFICES. The address of its registered office in the State of Delaware is 9 East Loockerman Street, Suite 1B, in the City of Dover, County of Kent, 19901. The name of its registered agent at such address is National Registered Agents, Inc.

Section 2. OTHER OFFICES. The corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1. PLACE OF MEETINGS. Meetings of stockholders shall be held at any place within or outside the State of Delaware designated by the Board of Directors. In the absence of any such designation, stockholders’ meetings shall be held at the principal executive office of the corporation.

Section 2. ANNUAL MEETING OF STOCKHOLDERS. The annual meeting of stockholders shall be held each year on a date and a time designated by the Board of Directors. At each annual meeting directors shall be elected and any other proper business may be transacted.

Section 3. QUORUM; ADJOURNED MEETINGS AND NOTICE THEREOF. A majority of the stock issued and outstanding and entitled to vote at any meeting of stockholders, the holders of which are present in person or represented by proxy, shall constitute a quorum for the transaction of business except as otherwise provided by law, by the Certificate of Incorporation, or by these Bylaws. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum and the votes present may continue to transact business until adjournment. If, however, such quorum shall not be present or represented at any meeting of the stockholders, a majority of the voting stock represented in person or by proxy may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote thereat.

Section 4. VOTING. When a quorum is present at any meeting, in all matters other than the election of directors, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes, or the Certificate of Incorporation, or these Bylaws, a different vote is required in which case such express provision shall govern and control the decision of such question. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.

Section 5. PROXIES. At each meeting of the stockholders, each stockholder having the right to vote may vote in person or may authorize another person or persons to act for him by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than

three years prior to said meeting, unless said instrument provides for a longer period. All proxies must be filed with the Secretary of the corporation at the beginning of each meeting in order to be counted in any vote at the meeting. Each stockholder shall have one vote for each share of stock having voting power, registered in his name on the books of the corporation on the record date set by the Board of Directors as provided in Article VII, Section 6 hereof.

Section 6. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose, or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called by the President and shall be called by the President or the Secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding, and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

Section 7. NOTICE OF STOCKHOLDERS’ MEETINGS. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which notice shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. The written notice of any meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation.

Section 8. MAINTENANCE AND INSPECTION OF STOCKHOLDER LIST. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

Section 9. STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in Delaware, its principal place of business, or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty days of the earliest dated consent delivered in the manner required by this Section 9 to the corporation, written consents signed by a sufficient number of holders to take action are delivered to the corporation by delivery to its registered office in Delaware, its principal place of business or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt notice of the taking of

the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

ARTICLE III

DIRECTORS

Section 1. THE NUMBER OF DIRECTORS. The number of directors which shall constitute the whole Board shall be not less than one (1) nor more than four (4) directors. The exact number shall be determined from time to time by resolution of the Board. Until otherwise determined by such resolution, the Board shall consist of four (4) directors. The directors need not be stockholders. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified; provided, however, that unless otherwise restricted by the Certificate of Incorporation or by law, any director or the entire Board of Directors may be removed, either with or without cause, from the Board of Directors at any meeting of stockholders by a majority of the stock represented and entitled to vote thereat.

Section 2. VACANCIES. Vacancies on the Board of Directors by reason of death, resignation, retirement, disqualification, removal from office, or otherwise, and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. The directors so chosen shall hold office until the next annual election of directors and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.

Section 3. POWERS. The property and business of the corporation shall be managed by or under the direction of its Board of Directors. In addition to the powers and authorities by these Bylaws expressly conferred upon them, the Board may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders.

Section 4. PLACE OF DIRECTORS’ MEETINGS. The directors may hold their meetings and have one or more offices, and keep the books of the corporation outside of the State of Delaware.

Section 5. REGULAR MEETINGS. Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by the Board.

Section 6. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by the President on forty-eight hours’ notice to each director, either personally or by mail or by telegram; special meetings shall be called by the President or the Secretary in like manner and on like notice on the written request of two directors unless the Board consists of only one director; in which case special meetings shall be called by the President or Secretary in like manner or on like notice on the written request of the sole director.

Section 7. QUORUM. At all meetings of the Board of Directors a majority of the authorized number of directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and the vote of a majority of the directors present at any meeting at which there is a quorum, shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute, by the Certificate of Incorporation or by these Bylaws. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. If only one director is authorized, such sole director shall constitute a quorum.

Section 8. ACTION WITHOUT MEETING. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee.

Section 9. TELEPHONIC MEETINGS. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

Section 10. COMMITTEES OF DIRECTORS. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each such committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation’s property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the Bylaws of the corporation; and, unless the resolution or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock.

Section 11. MINUTES OF COMMITTEE MEETINGS. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.

Section 12. COMPENSATION OF DIRECTORS. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, the Board of Directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

ARTICLE IV

OFFICERS

Section 1. OFFICERS. The officers of this corporation shall be chosen by the Board of Directors and shall include a Chairman of the Board of Directors or a President, or both, a Secretary and a Treasurer. The corporation may also have at the discretion of the Board of Directors such other officers as are desired and such other officers as may be appointed in accordance with the provisions of Section 3 hereof. At the time of the election of officers, the directors may by resolution determine the order of their rank. Any number of offices may be held by the same person, unless the Certificate of Incorporation or these Bylaws otherwise provide.

Section 2. ELECTION OF OFFICERS. The Board of Directors, at its first meeting after each annual meeting of stockholders, shall choose the officers of the corporation.

Section 3. SUBORDINATE OFFICERS. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board.

Section 4. COMPENSATION OF OFFICERS. The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors.

Section 5. TERM OF OFFICE; REMOVAL AND VACANCIES. The officers of the corporation shall hold office until their successors are chosen and qualify in their stead. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. If the office of any officer or officers becomes vacant for any reason, the vacancy shall be filled by the Board of Directors.

Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such an officer be elected, shall, if present, preside at all meetings of the Board of Directors and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by these Bylaws. If there is no President, the Chairman of the Board shall, in addition, be the Chief Executive Officer of the corporation and shall have the powers and duties prescribed in Section 7 of this Article IV.

Section 7. PRESIDENT. Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an officer, the President shall be the Chief Executive Officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the corporation. He shall preside at all meetings of the stockholders and, in the absence of the Chairman of the Board, or if there be none, at all meetings of the Board of Directors. He shall be an ex-officio member of all committees and shall have the general powers and duties of management usually vested in the office of President and Chief Executive Officer of corporations, and shall have such other powers and duties as may be prescribed by the Board of Directors or these Bylaws.

Section 8. VICE PRESIDENTS. In the absence or disability of the President, the Vice Presidents in order of their rank as fixed by the Board of Directors, or if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. The Vice Presidents shall have such other duties as from time to time may be prescribed for them, respectively, by the Board of Directors. In the event there are two or more Vice Presidents, then one or more may be designated as Executive Vice President, Senior Vice President, or other similar or dissimilar title.

Section 9. SECRETARY. The Secretary shall attend all sessions of the Board of Directors and all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose; and shall perform like duties for the standing committees when required by the Board of Directors. He shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or these Bylaws. He shall keep in safe custody the seal of the corporation, and when authorized by the Board, affix the same to any instrument requiring it, and when so affixed it shall be attested by his signature or by the signature of an Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature.

Section 10. ASSISTANT SECRETARY. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors, or if there be no such determination, the Assistant Secretary designated by the Board of Directors, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

Section 11. TREASURER. The Treasurer shall be the Chief Financial Officer of the corporation and shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys, and other valuable effects in the name and to the credit of the corporation, in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the corporation. If required by the Board of Directors, he shall give the corporation a bond, in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors, for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation.

ARTICLE V

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The corporation shall indemnify to the maximum extent permitted by law any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no such indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such Court of Chancery or such other court shall deem proper.

To the extent that a director or officer of the corporation shall be successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraphs (a) and (b), or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith.

Any indemnification under paragraphs (a) and (b) (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (a) and (b). Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders. The corporation, acting through its Board of Directors or otherwise, shall cause such determination to be made if so requested by any person who is indemnifiable under this Article V.

Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized in this Article V.

The indemnification and advancement of expenses provided by, or granted pursuant to, the other paragraphs of this Article V shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office.

The Board of Directors may authorize, by a vote of a majority of a quorum of the Board of Directors, the corporation to purchase and maintain insurance on behalf of any person who is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article V.

For the purposes of this Article V, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors or officers so that any person who is or was a director or officer of such

constituent corporation, or is or was serving at the request of such constituent corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article V with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.

For purposes of this section, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the corporation” shall include service as a director or officer of the corporation which imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this section.

The indemnification and advancement of expenses provided by, or granted pursuant to, this Article V shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.

The corporation shall be required to indemnify a person in connection with an action, suit or proceeding (or part thereof) initiated by such person only if the action, suit or proceeding (or part thereof) was authorized by the Board of Directors of the corporation.

ARTICLE VI

INDEMNIFICATION OF EMPLOYEES AND AGENTS

The corporation may indemnify every person who was or is a party or is or was threatened to be made a party to any action, suit, or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was an employee or agent of the corporation or, while an employee or agent of the corporation, is or was serving at the request of the corporation as an employee or agent or trustee of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including counsel fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding, to the extent permitted by applicable law.

ARTICLE VII

CERTIFICATES OF STOCK

Section 1. CERTIFICATES. Every holder of stock of the corporation shall be entitled to have a certificate signed by, or in the name of the corporation by, the Chairman of the Board of Directors, or the President or a Vice President, and by the Secretary or an Assistant Secretary, or the Treasurer of the corporation, certifying the number of shares represented by the certificate owned by such stockholder in the corporation.

Section 2. SIGNATURES ON CERTIFICATES. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue.

Section 3. STATEMENT OF STOCK RIGHTS, PREFERENCES, PRIVILEGES. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

Section 4. LOST CERTIFICATES. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

Section 5. TRANSFERS OF STOCK. Upon surrender to the corporation, or the transfer agent of the corporation, of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

Section 6. FIXED RECORD DATE. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders, or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date which shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors.

Section 7. REGISTERED STOCKHOLDERS. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware.

ARTICLE VIII

GENERAL PROVISIONS

Section 1. DIVIDENDS. Dividends upon the capital stock of the corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any

regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation.

Section 2. PAYMENT OF DIVIDENDS; DIRECTORS’ DUTIES. Before payment of any dividend there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interests of the corporation, and the directors may abolish any such reserve.

Section 3. CHECKS. All checks or demands for money and notes of the corporation shall be signed by such officer or officers as the Board of Directors may from time to time designate.

Section 4. FISCAL YEAR. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.

Section 5. CORPORATE SEAL. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words “Corporate Seal, Delaware.” Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

Section 6. MANNER OF GIVING NOTICE. Whenever, under the provisions of the statutes or of the Certificate of Incorporation or of these Bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram.

Section 7. WAIVER OF NOTICE. Whenever any notice is required to be given under the provisions of the statutes or of the Certificate of Incorporation or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

Section 8. ANNUAL STATEMENT. The Board of Directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation.

ARTICLE IX

AMENDMENTS

Section 1. AMENDMENT BY DIRECTORS OR STOCKHOLDERS. These Bylaws may be altered, amended or repealed or new Bylaws may be adopted by the stockholders or by the Board of Directors, when such power is conferred upon the Board of Directors by the Certificate of Incorporation, at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new Bylaws be contained in the notice of such special meeting. If the power to adopt, amend or repeal Bylaws is conferred upon the Board of Directors by the Certificate of Incorporation, it shall not divest or limit the power of the stockholders to adopt, amend or repeal Bylaws.

THE KILIAN COMPANY

CERTIFICATE OF SECRETARY

I, the undersigned, do hereby certify:

(1) That I am the duly elected and acting Secretary of The Kilian Company, a Delaware corporation; and

(2) That the foregoing bylaws constitute the bylaws of said corporation as duly adopted by the written consent of the Incorporator of said corporation as of August 17, 2004.

IN WITNESS WHEREOF, I have hereunto subscribed my name this 17^th day of August, 2004.


	Thomas F. Tatarczuch
	Secretary

EX-3.15 19 a2155511zex-3_15.htm EXHIBIT 3.15

Exhibit 3.15

CERTIFICATE OF INCORPORATION

KILIAN MANUFACTURING CORPORATION

FIRST: The name of the corporation is Kilian Manufacturing Corporation.

SECOND: Its registered office in the State of Delaware is located at No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name and address of its registered agent is The Corporation Trust Company, No. 100 West Tenth Street, Wilmington, Delaware 19801.

THIRD: The nature of the business, or objects or purposes to be transacted, promoted or carried on are:

To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

FOURTH: The total number of shares of stock which the corporation shall have authority to issue is one hundred (100); all of such shares shall be without par value.

FIFTH: The minimum amount of capital with which the corporation will commence business is One Thousand Dollars ($1,000).

SIXTH: The name and place of residence of the incorporator are as follows:

Name		Residence

John D Evans		Two Broadway
		New York, New York 10004

SEVENTH: The corporation is to have perpetual existence.

EIGHTH: The private property of the stockholders shall not be subject to the payment of corporate debts to any extent.

NINTH: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized:

To make, alter or repeal the By-Laws of the corporation.

To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation.

To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created.

By resolution passed by a majority of the whole board, to designate one or more committees, each committee to consist of two or more of the directors of the corporation, which, to the extent provided in the resolution or in the By-Laws of the corporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name

or names as may be stated in the By-Laws of the corporation or as may be determined from time to time by resolution adopted by the Board of Directors.

When and as authorized by the affirmative vote of the holders of a majority of the stock issued and outstanding having voting powers given at the stockholders’ meeting duly called for that purpose, or when authorized by the written consent of the holders of a majority of the voting stock issued and outstanding, to sell, lease or exchange all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may be in whole or in part shares of stock in, and/or other securities of, any other corporation or corporations, as its Board of Directors shall deem expedient and for the best interests of the corporation.

The corporation may in its By-Laws confer powers upon its directors in addition to those conferred herein and in addition to the powers and authorities now or hereafter expressly conferred upon them by statute.

TENTH: Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditors or

stockholder thereof, or on the application of any receiver or receivers appointed for this corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation.

ELEVENTH: Meetings of stockholders may be held outside the State of Delaware, if the By-Laws so provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of

the corporation. Elections of directors need not be by ballot unless the By-Laws of the corporation shall so provide.

TWELFTH: The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.

THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, does make this certificate, hereby declaring and certifying that the facts herein stated are true, and accordingly has hereunto set his hand and seal this 23^rd day of October, 1975.

	/s/ John D. Evans
	John D. Evans

EX-3.16 20 a2155511zex-3_16.htm EXHIBIT 3.16

Exhibit 3.16

KILIAN MANUFACTURING CORPORATION

* * * * * *

BY-LAWS

* * * *

ARTICLE I

OFFICES

Section 1. The principal office shall be in the City of Wilmington, County of New Castle, State of Delaware.

Section 2. The corporation may also have offices at such places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require.

Section 3. The books and records of the corporation may be kept either within or without the State of Delaware, except as required by statute.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1. All meetings of the stockholders shall be held at the principal office of the corporation or at such other place, within or without the State of Delaware, and at such time, as may be fixed from time to time by the Board of Directors and as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.

Amended April 28, 1976

Section 2. The annual meeting of the stockholders shall be held on such date in the month of February as shall be fixed by the President, or, in his absence, by the Secretary-Treasurer.

Section 3. A special meeting of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting.

Section 4. Written notice of every meeting of stockholders, stating the time, place and object thereof, shall be given to each stockholder entitled to vote thereat, in person or by mail addressed to him at his last known post office address, at least ten days before the date fixed for the meeting.

Section 5. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

Section 6. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in

person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified.

Section 7. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, except as otherwise provided by statute or by the Certificate of Incorporation.

Section 8. At any meeting of the stockholders the chairman of the Board of Directors, if any, and if none or in his absence the president shall preside.

Section 9. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, the meeting and vote of stockholders may be dispensed with if all of the stockholders who would have been entitled to vote upon the action if such meeting were held shall consent in writing to such corporate action being taken.

ARTICLE III

DIRECTORS

Section 1. The business of the corporation shall be managed by its Board of Directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or these by-laws directed or required to be exercised or done by the stockholders.

Section 2. The board shall consist of five directors. The number of directors may be increased or decreased by resolution of the Board of Directors or by the stockholders at the annual meeting, but the number of directors which shall constitute the whole board shall be not less than three nor more than fifteen. The directors shall be elected at the annual meeting of the stockholders, except as hereinafter provided, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum. Directors may be removed by the stockholders at any time, with or without cause, and may be removed from office at any time for cause by a vote of the majority of the whole Board of Directors after being afforded an opportunity to be heard.

Section 3. The board may hold meetings, both regular and special, either within or without the State of Delaware, at such place and time as a majority of the board may from time to time appoint, or as may be designated in any notice calling a meeting.

Section 4. Special meetings of the board may be called by the president or on the written request of any two directors.

Section 5. Notice of the time and place of each directors’ meeting shall be given to each director by written notice mailed to him at his residence at least two days before the day on which such meeting is to be held, or by telegraph, telephone or personally at least twenty-four hours before the time at which such meeting is to be held.

Section 6. At all meetings of the board one-third of the total number of directors on the board at the time but not less than two directors shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation. If a quorum shall not be present at any meeting of the Board of Directors, the directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 7. Any action required or permitted to be

taken at any meeting of the Board of Directors may be taken without a meeting if all the members of the board consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board.

Section 8. The Board of Directors may, by resolution passed by a majority of the whole board, designate one or more committees, including an executive committee, each committee to consist of two or more of the directors of the corporation, which, to the extent provided in the resolution, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers which may require it. The board may delegate to the executive committee, if any, authority to exercise all the powers of the board while the board is not in session. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors or of the executive committee. Other committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors.

ARTICILE IV

OFFICERS

Section 1. The officers of the corporation shall be chosen by the Board of Directors and shall be a president, a vice

president, a secretary, a treasurer and such other officers as the board may choose. Two or more offices may be held by the same person, except that the offices of president and secretary shall not be held by the same person. Officers shall hold office until the meeting of the board following the next annual meeting of the stockholders and until their successors are chosen and qualified, subject to the right of the board to remove officers, abolish the offices, or increase or reduce the term of office. The officers shall have such powers and shall perform such duties as the board may determine.

ARTICLE V

STOCK AND STOCKHOLDERS

Section 1. Every holder of stock of the corporation shall be entitled to have a certificate, signed in the name of the corporation by the president or a vice-president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation, certifying the number of shares owned by him in the corporation.

LOST CERTIFICATES

Section 2. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a

new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum and form as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed.

REGISTERED STOCKHOLDERS

Section 3. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE VI

FISCAL YEAR

Section 1. The fical year of the corporation shall be fixed by resolution of the Board of Directors and in the event that it is not so fixed, it shall be the calendar year.

ARTICLE VII

AMENDMENTS

Section 1. These by-laws may be altered or repealed at any regular meeting of the stockholders or the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration or repeal be contained in the office of such meeting.

EX-3.17 21 a2155511zex-3_17.htm EXHIBIT 3.17

Exhibit 3.17

CERTIFICATE OF FORMATION

N.G.C. GEAR, L.L.C.

1. NAME

The name of the limited liability company is N.G.C. Gear, L.L.C. (the “LLC”).

2. REGISTERED OFFICE AND AGENT

The address of the LLC’s registered office in the State of Delaware is 1013 Centre Road in the City of Wilmington, County of New Castle. The name of the LLC’s registered agent at such address is The Corporation Service Company.

3. AUTHORIZED PERSON

The name and address of the authorized person is David R. Dunn, Hogan & Hartson L.L.P., 111 South Calvert Street, Baltimore, Maryland 21202. The powers of the authorized person shall terminate upon the filing of this Certificate of Formation.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation of N.G.C., L.L.C. this 23rd day of June, 1997.

	By:	/s/ David R. Dunn
		David R. Dunn

STATE OF DELAWARE

SECRETARY OF STATE

DIVISION OF CORPORATIONS

FILED 09:00 AM 06/23/1997

971207543 - 2765519

STATE OF DELAWARE

SECRETARY OF STATE

DIVISION OF CORPORATIONS

FILED 09:00 AM 07/01/1997

971219793 - 2765519

CERTIFICATE OF MERGER

NUTTALL GEAR CORPORATION

a Delaware Corporation

INTO

N.G.C. GEAR, L.L.C.

The undersigned corporation DOES HEREBY CERTIFY:

FIRST: That the name and state of incorporation of each of the constituent corporations of the merger are as follows:

NAME		STATE OF INCORPORATION

N.G.C. Gear, L.L.C.		Delaware
Nuttall Gear Corporation		Delaware

SECOND: That an agreement and plan of merger between the parties to the merger has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations in accordance with the requirements of Section 18-209 & 264 of the General Corporation Law of the State of Delaware.

THIRD: That the name of the surviving corporation of the merger is N.G.C. Gear, L.L.C.

FOURTH: That the name of N.G.C. Gear, L.L.C., the surviving corporation, is hereby changed to “Nuttall Gear L.L.C.”

FIFTH: That the merger has been duly authorized by the sole stockholder of Nuttall Gear Corporation and the sole member of N.G.C. Gear, L.L.C.

SIXTH: That the effective date shall be the date on which this Certificate of Merger is filed with the Secretary of State of the State of Delaware.

SEVENTH: That the Certificate of Formation of N.G.C. Gear, L.L.C., shall be the certificate of incorporation of the surviving corporation.

EIGHTH: That the executed agreement of merger is on file at the principal place of business of the surviving corporation. The address of said principal place of business is 2221 Niagara Falls Boulevard, P.O. Box 1032, Niagara Falls, N.Y. 14302.

NINTH: That a copy of the agreement of merger will be furnished on request and without cost to any stockholder and / or member of any corporation which is a party to this transaction.

IN WITNESS WHEREOF, N.G.C. Gear, L.L.C. has caused its corporate seal to be affixed and this certificate to be signed by Philip W. Knisely, its President, and John A. Young, its Secretary, this 1st day of July, 1997.

		N.G.C. GEAR, L.L.C.,


		By:	/s/ Philip W. Knisely
			Philip W. Knisely, President
By:	/s/ John A. Young
	John A. Young
	Secretary

EX-3.18 22 a2155511zex-3_18.htm EXHIBIT 3.18

Exhibit 3.18

AMENDED AND RESTATED LIMITED LIABILITY COMPANY

AGREEMENT

NUTTALL GEAR LLC

THIS LIMITED LIABILITY COMPANY AGREEMENT of Nuttall Gear LLC (the “Agreement”) is effective as of June 30, 2004.

Recitals:

A. Thomas M. O’Brien, as an authorized person, has executed and filed a Certificate of Formation, dated June 30, 2004 (the “Certificate”), to form “NUTTALL GEAR LLC” (the “Company”) as a limited liability company under and pursuant to and in accordance with the Delaware Limited Liability Company Act, as amended (6 Del. C. § 18-101, et seq.) (the “Act”). The powers of the authorized person shall terminate upon the filing of the Certificate.

B. American Enterprises MPT Corporation is the sole member of the Company (the “Member”).

C. By executing this Agreement, the Member hereby ratifies the Certificate and adopts this Agreement to set forth the terms governing the affairs of the Company and the conduct of its business.

Terms of Agreement:

1. Name. The name of the Company is NUTTALL GEAR LLC. The Member may change the name of the Company from time to time.

Except to the extent required under the Act, the Member shall not be required to make any additional contributions to the capital of the Company.

5. Interests Governed by Article 8: Certificates. Limited liability company interests in the Company, including the Interest, shall be securities governed by Article 8 of the Delaware Uniform Commercial Code. The Company shall have the authority to issue certificates of limited liability company interests evidencing limited liability company interests in the Company, including the Interest, in accordance with Section 18-702(c) of the Act.

7. Officers; Agents.

John A. Young		President and Chief Executive Officer
		Acting Treasurer and Chief Financial Officer
Thomas M. O’Brien		Senior Vice President, General Counsel and Secretary
Steven W. Weidenmuller		Senior Vice President, Human Resources
William Flexon		Vice President, Taxes
G. Scott Faison		Vice President and Controller
Joseph O. Bunting, III		Vice President and Assistant Secretary
Michael G. Ryan		Vice President
Charles W. Nims		Vice President
Douglas A. Sulanke		Assistant Controller
Traci Benish		Assistant Secretary

(b) any remaining assets shall be distributed to the Member.

12. Amendments. The Member at any time and from time to time may amend this Agreement by executing a written amendment.

IN WITNESS WHEREOF, the Member has caused this Limited Liability Company Agreement to be duly executed on its behalf as of June 30, 2004.

	AMERICAN ENTERPRISES MPT CORPORATION


	By:	/s/ Thomas M. O’Brien
	Name:	Thomas M. O’Brien
	Title:	Senior Vice President, General
		Counsel and Secretary

EX-3.19 23 a2155511zex-3_19.htm EXHIBIT 3.19

Exhibit 3.19

CERTIFICATE OF FORMATION
OF
WARNER ELECTRIC LLC

THIS Certificate of Formation of WARNER ELECTRIC LLC (the “Company”), dated as of July 2, 2004, is being duly executed and filed by Thomas M. O’Brien, as an authorized person, to form a limited liability company under the Delaware Limited Liability Company Act (6 Del.C. §18-101, et seq.).

1. Name. The name of the limited liability company is WARNER ELECTRIC LLC.

4. The effective time of the conversion shall be at 11:59 p.m. on July 2, 2004.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation as of the date first-above written.

	/s/ Thomas M. O’Brien
	Thomas M. O’Brien
	Authorized Person

EX-3.20 24 a2155511zex-3_20.htm EXHIBIT 3.20

Exhibit 3.20

LIMITED LIABILITY COMPANY AGREEMENT

WARNER ELECTRIC LLC

THIS LIMITED LIABILITY COMPANY AGREEMENT of Warner Electric LLC (the “Agreement”) is effective as of July 2, 2004.

Recitals:

A. Thomas M. O’Brien, as an authorized person, has executed and filed a Certificate of Formation, dated July 2, 2004 (the “Certificate”), to form “Warner Electric LLC” (the “Company”) as a limited liability company under and pursuant to and in accordance with the Delaware Limited Liability Company Act, as amended (6 Del. C. § 18-101, et seq.) (the “Act”). The powers of the authorized person shall terminate upon the filing of the Certificate.

B. Warner Electric Holding, Inc. is the sole member of the Company (the “Member”).

C. By executing this Agreement, the Member hereby ratifies the Certificate and adopts this Agreement to set forth the terms governing the affairs of the Company and the conduct of its business.

Terms of Agreement:

1. Name. The name of the Company is Warner Electric LLC. The Member may change the name of the Company from time to time.

Except to the extent required under the Act, the Member shall not be required to make any additional contributions to the capital of the Company.

5. Interests Governed by Article 8; Certificates. Limited liability company interests in the Company, including the Interest, shall be securities governed by Article 8 of the Delaware Uniform Commercial Code. The Company shall have the authority to issue certificates of limited liability company interests evidencing limited liability company interests in the Company, including the Interest, in accordance with Section 18-702(c) of the Act.

7. Officers; Agents.

John A. Young		President and Chief Executive Officer
		Acting Treasurer and Chief Financial Officer
Thomas M. O’Brien		Senior Vice President, General Counsel and Secretary
Steven W. Weidenmuller		Senior Vice President, Human Resources
William Flexon		Vice President, Taxes
G. Scott Faison		Vice President and Controller
Joseph O. Bunting, III		Vice President and Assistant Secretary
Michael G. Ryan		Vice President
Charles W. Nims		Vice President
Douglas A. Sulanke		Assistant Controller
Traci Benish		Assistant Secretary

(b) any remaining assets shall be distributed to the Member.

12. Amendments. The Member at any time and from time to time may amend this Agreement by executing a written amendment.

IN WITNESS WHEREOF, the Member has caused this Limited Liability Company Agreement to be duly executed on its behalf as of June 30, 2004.

	WARNER ELECTRIC HOLDING, INC.


	By:	/s/ Thomas M. O’Brien
	Name:	Thomas M. O’Brien
	Title:	Senior Vice President, General
		Counsel and Secretary

Warner Electric LLC Agreement

EX-3.21 25 a2155511zex-3_21.htm EXHIBIT 3.21

Exhibit 3.21

		*State of Delaware*
		*Secretary of State*
		*Division* *of Corporations*
		*Delivered 01:29 PM 07/02/2004***
		*FILED 01:26 PM 07/02/2004*
		*SRV 040491108 - 3142046 FILE*

CERTIFICATE OF FORMATION
OF
WARNER ELECTRIC TECHNOLOGY LLC

THIS Certificate of Formation of WARNER ELECTRIC TECHNOLOGY LLC (the “Company”), dated as of July 2, 2004, is being duly executed and filed by Thomas M. O’Brien, as an authorized person, to form a limited liability company under the Delaware Limited Liability Company Act (6 Del.C. § 18-101, et seq.).

1. Name. The name of the limited liability company is WARNER ELECTRIC TECHNOLOGY LLC.

4. The effective time of the conversion shall be at 11:59 p.m. on July 2, 2004.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation as of the date first-above written.

	/s/ Thomas M. O’Brien
	Thomas M. O’Brien
	Authorized Person

EX-3.22 26 a2155511zex-3_22.htm EXHIBIT 3.22

Exhibit 3.22

LIMITED LIABILITY COMPANY AGREEMENT

WARNER ELECTRIC TECHNOLOGY LLC

THIS LIMITED LIABILITY COMPANY AGREEMENT of Warner Electric Technology LLC (the “Agreement”) is effective as of July 2, 2004.

Recitals:

A. Thomas M. O’Brien, as an authorized person, has executed and filed a Certificate of Formation, dated July 2, 2004 (the “Certificate”), to form “Warner Electric Technology LLC” (the “Company”) as a limited liability company under and pursuant to and in accordance with the Delaware Limited Liability Company Act, as amended (6 Del. C. § 18-101, et seq.) (the “Act”). The powers of the authorized person shall terminate upon the filing of the Certificate.

B. Warner Electric Holding, Inc. is the sole member of the Company (the “Member”).

C. By executing this Agreement, the Member hereby ratifies the Certificate and adopts this Agreement to set forth the terms governing the affairs of the Company and the conduct of its business.

Terms of Agreement:

1. Name. The name of the Company is Warner Electric Technology LLC. The Member may change the name of the Company from time to time.

Except to the extent required under the Act, the Member shall not be required to make any additional contributions to the capital of the Company.

7. Officers; Agents.

John A. Young	President and Chief Executive Officer
	Acting Treasurer and Chief Financial Officer
Thomas M. O’Brien	Senior Vice President, General Counsel and Secretary
Steven W. Weidenmuller	Senior Vice President, Human Resources
William Flexon	Vice President, Taxes
G. Scott Faison	Vice President and Controller
Joseph O. Bunting, III	Vice President and Assistant Secretary
Michael G. Ryan	Vice President
Charles W. Nims	Vice President
Douglas A. Sulanke	Assistant Controller
Traci Benish	Assistant Secretary

(b) any remaining assets shall be distributed to the Member.

12. Amendments. The Member at any time and from time to time may amend this Agreement by executing a written amendment.

IN WITNESS WHEREOF, the Member has caused this Limited Liability Company Agreement to be duly executed on its behalf as of June 30, 2004.

	WARNER ELECTRIC HOLDING, INC.


	By:	/s/ Thomas M. O’Brien
	Name:	Thomas M. O’Brien
	Title:	Senior Vice President, General
		Counsel and Secretary

Warner Electric Technology LLC Agreement

EX-3.23 27 a2155511zex-3_23.htm EXHIBIT 3.23

Exhibit 3.23

STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 12/14/1999
991537817 – 3142042

CERTIFICATE OF INCORPORATION

WARNER ELECTRIC INTERNATIONAL HOLDING, INC.

FIRST. The name of this corporation shall be:

WARNER ELECTRIC INTERNATIONAL HOLDING, INC.

SECOND. Its registered office in the State of Delaware is to be located at 1013 Centre Road, in the City of Wilmington, County of New Castle and its registered agent at such address is CORPORATION SERVICE COMPANY.

THIRD. The purpose or purposes of the corporation shall be:

To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

FOURTH. The total number of shares of stock which this corporation is authorized to issue is:

One Thousand (1,000) Shares With A Par Value Of $1.00 Amounting To One Thousand ($1,000) dollars.

FIFTH. The name and address of the incorporator is as follows:

Denise L. Krackow

Corporation Service Company

1013 Centre Road

Wilmington, DE 19805

SIXTH. The Board of Directors shall have the power to adopt, amend or repeal the by-laws.

SEVENTH. No director shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty by such director as a director. Notwithstanding the foregoing sentence, a director shall be liable to the extent provided by applicable law, (i) for breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article Seventh shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment.

IN WITNESS WHEREOF, the undersigned, being the incorporator hereinbefore named, has executed, signed and acknowledged this certificate of incorporation this Thirteenth day of December, A.D., 1999.

	/s/ Denise L. Krackow
	Denise L. Krackow
	Incorporator

State of Delaware
Secretary of State
Division of Corporations
Delivered 01:32 PM 07/01/2004
FILED 01:32 PM 07/01/2004
SRV 040487317 – 3142042 FILE

CERTIFICATE OF MERGER OF

WARNER ELECTRIC FINANCE COMPANY, INC.

a Delaware Corporation,

WITH AND INTO

WARNER ELECTRIC INTERNATIONAL HOLDING, INC.

a Delaware Corporation

The undersigned corporation, organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “DGCL”), DOES HEREBY CERTIFY:

FIRST: The name and state of incorporation of each of the constituent corporations of the merger are as follows:

NAME		STATE OF INCORPORATION

Warner Electric Finance Company, Inc.		Delaware

Warner Electric International Holding, Inc.		Delaware

SECOND: An Agreement and Plan of Merger, dated as of July 1, 2004 (the “Merger Agreement”), between the constituent corporations has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations in accordance with the provisions of Section 251 of the DGCL.

THIRD: The name of the surviving corporation in the merger is Warner Electric International Holding, Inc.

FOURTH: The certificate of incorporation of Warner Electric International Holding, Inc. shall be amended so that Article FOURTH thereof reads in its entirety as follows:

FOURTH. The total number of shares of stock which this corporation is authorized to issue is:

One thousand one hundred (1,100) Shares with A Par Value of $1.00 Amounting to One Thousand One Hundred Dollars ($1,100).

and as so amended shall be the certificate of incorporation of the Surviving Corporation, until thereafter amended as provided therein or by applicable law.

FIFTH: The executed Merger Agreement is on file at the principal place of business of the surviving corporation. The address of the principal place of business of the surviving corporation is 8730 Stony Point Parkway, Suite 150, Richmond, VA 23235.

SIXTH: A copy of the Merger Agreement will be furnished by the surviving corporation, on request and without cost, to any stockholder of any constituent corporation.

IN WITNESS WHEREOF, Warner Electric International Holding, Inc., a Delaware corporation, has caused this certificate to be signed by Thomas M. O’Brien, its Senior Vice President, General Counsel and Secretary, an authorized officer of the corporation, on this 1^st day of July, 2004.

	WARNER ELECTRIC INTERNATIONAL HOLDING, INC. a Delaware corporation


	By:	/s/ Thomas M. O’Brien
		Thomas M. O’Brien
		Senior Vice President, General
		Counsel and Secretary

EX-3.24 28 a2155511zex-3_24.htm EXHIBIT 3.24

Exhibit 3.24

BYLAWS

WARNER ELECTRIC INTERNATIONAL HOLDING, INC.

(a Delaware corporation)

ARTICLE I

STOCKHOLDERS

Section 1.1 Annual Meetings. The annual meeting shall of the stockholders of the Corporation for the election of directors and for the transaction of such other business as properly may come before such meeting shall be held at such place, either within or without the State of Delaware, and on such date and at such time as shall be designated from time to time by the Board of Directors and set forth in the notice or waiver of notice of the meeting.

Section 1.2 Special Meetings. Special meetings of the stockholders may be called at any time by the President (or, in the event of his absence or disability, by any Vice President), or by the Board of Directors. A special meeting shall be called by the President (or, in the event of his absence or disability, by any Vice President), or by the Secretary, immediately upon receipt of a written request therefor by stockholders holding in the aggregate not less than a majority of the outstanding shares of the Corporation at the time entitled to vote at any meeting of the stockholders. If such officers of the Board of Directors shall fail to call such meeting within 20 days after receipt of such request, any stockholder executing such request may call such meeting. Such special meetings of the stockholders shall be held at such places, within or without the State of Delaware, as shall be specified in the respective notices or waivers of notice thereof.

Section 1.3 Notice of Meetings. Waiver. The Secretary or any Assistant Secretary shall cause written notice of the place, date, and hour of each meeting of the stockholders, and in the case of a special meeting, the purpose or purposes for which such meeting is called, to be given personally or by mail, not less than ten days nor more than sixty days prior to the meeting, to each stockholder of record entitled to vote at such meeting. If such notice is mailed, it shall be deemed to have been given to a stockholder when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the record of stockholders of the Corporation, or, if he shall have filed with the Secretary of the Corporation a written request that notices to him be mailed to some other address, then directed to him at such other address. Such further notice shall be given as may be required by law.

No notice of any meeting of stockholders need be given to any stockholder who submits a signed waiver of notice, whether before or after the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be

specified in any written waiver of notice. The attendance of any stockholder at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting is not lawfully called or convened.

Section 1.4 Quorum. Except as otherwise required by law or by the Certificate of Incorporation, the presence in person or by proxy of the holders of record of a majority of the shares entitled to vote at a meeting of stockholders shall constitute a quorum for the transaction of business at such meeting.

Section 1.5 Voting. If pursuant to Section 5.5 of these By-Laws, a record date has been fixed, every holder of record of shares is entitled to vote at a meeting of stockholders shall be entitled to one vote for each share outstanding in his name on the books of the Corporation at the close of business on such record date. If no record date has been fixed, then every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote for each share of stock standing in his name on the books of the Corporation at the close of business on the day next preceding the day on which notice of the meeting is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. Except as otherwise required by law or by the Certificate of Incorporation, the vote of a majority of the shares represented in person or by proxy at any meeting at which a quorum is present shall be sufficient for the transaction of any business at such meeting.

Section 1.6 Voting by Ballot. No vote of the stockholders need be taken by written ballot unless otherwise required by law. Any vote which need not be taken by ballot may be conducted in any manner approved by the meeting.

Section 1.7 Adjournment. If a quorum is not present at any meeting of the stockholders, the stockholders present in person or by proxy shall have the power to adjourn any such meeting from time to time until a quorum is present. Notice of any adjourned meeting of the stockholders of the Corporation need not be given if the place, date and hour thereof are announced at the meeting at which the adjournment is taken, provided, however, that if the adjournment is for more than thirty days, or if after the adjournment a new record date for the adjourned meeting is fixed pursuant to Section 5.5 of these By-Laws, a notice of the adjourned meeting, conforming to the requirements of Section 1.3 hereof, shall be given to each stockholder of record entitled to vote at such meeting. At any adjourned meeting at which a quorum is present, any business may be transacted that might have been transacted on the original date of the meeting.

Section 1.8 Proxies. Any stockholder entitled to vote at any meeting of the stockholders or to express consent to or dissent from corporate action without a meeting may authorize another person or persons to vote at any such meeting and express consent or dissent for him by proxy. A stockholder may authorize a valid proxy by executing a written instrument signed by such stockholder, or by causing his or her signature to be affixed to such writing by any reasonable means including, but not limited to, by facsimile signature, or by transmitting or

authorizing the transmission of a telegram, cablegram or other means of electronic transmission to the person designated as the holder of the proxy, a proxy solicitation firm or a like authorized agent. No such proxy shall be voted or acted upon after the expiration of three years from the date of such proxy, unless such proxy provides for a longer period. Every proxy shall be revocable at the pleasure of the stockholder executing it, except in those cases where applicable law provides that a proxy shall be irrevocable. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by filing another duly executed proxy bearing a later date with the Secretary. Proxies by telegram, cablegram or other electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram or other electronic transmission was authorized by the stockholder. Any copy, facsimile telecommunication or other reliable reproduction of a writing or transmission created pursuant to this section may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunications or other reproduction shall be a complete reproduction of the entire original writing or transmission.

Section 1.9 Organization; Procedure. At every meeting of stockholders the presiding officer shall be the President or, in the event of his absence or disability, a presiding officer chosen by a majority of the stockholders present in person or by proxy. The Secretary, or in the event of his absence or disability, the Assistant Secretary, if any, or if there is no Assistant Secretary, in the absence of the Secretary, an appointee of the presiding officer shall act as Secretary of the meeting. The order of business and all other matters of procedure at every meeting of stockholders may be determined by such presiding officer.

Section 1.10 Consent of Stockholders in Lieu of Meeting. To the fullest extend permitted by law, whenever the vote of stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, such action may be taken without a meeting, without prior notice and without a vote of stockholders, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer of agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.

Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty days of the earliest dated consent delivered in the manner required by law to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book

in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. [Section 228(a), (c).]

ARTICLE II

BOARD OF DIRECTORS

Section 2.1 General Powers. Except as may otherwise be provided by law, by the Certificate of Incorporation or by these By-Laws, the property, affairs and business of the Corporation shall be managed by or under the direction of the Board of Directors and the Board of Directors may exercise all powers of the Corporation.

Section 2.2 Number and Term of Office. The number of Directors constituting the entire Board of Directors shall be three, which number shall be modified from time to time by resolution of the Board of Directors, but in no event shall the number of Directors be less than one. Each Director (whenever elected) shall hold office until his successor has been duly elected and qualified, or until his earlier death, resignation or removal.

Section 2.3 Election of Directors. Except as otherwise provided in Sections 2.12 and 2.13 of these By-Laws, the Directors shall be elected at each annual meeting of the stockholders. If the annual meeting for the election of Directors is not held on the date designated therefor, the Directors shall cause the meeting to be held as soon thereafter as convenient. At each meeting of the stockholders for the election of Directors, provided a quorum is present, the Directors shall be elected by a plurality of the votes validly cast in such election.

Section 2.4 Annual and Regular Meetings. The annual meeting of the Board of Directors for the purpose of electing officers and for the transaction of such other business as may come before the meeting shall be held as soon as possible following adjournment of the annual meeting of the stockholders at the place of such annual meeting of the stockholders. Notice of such annual meeting of the Board of Directors need not be given. The Board of Directors from time to time may by resolution provide for the holding of regular meetings and fix the place (which may be within or without the State of Delaware) and the date and hour of such meetings. Notice of regular meetings need not be given, provided, however, that if the Board of Directors shall fix or change the time or place of any regular meeting, notice of such action shall be mailed promptly, or sent by telegram, radio or cable, to each Director who shall not have been present at the meeting at which such action was taken, addressed to him at his usual place of business, or shall be delivered to him personally. Notice of such action need not be given to any Director who attends the first regular meeting after such action is taken without protesting the lack of notice to him, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice, whether before or after such meeting.

Section 2.5 Special Meetings; Notice. Special meetings of the Board of Directors shall be held whenever called by the President, or in the event of his absence or disability, by any

Vice President, at such place (within or without the State of Delaware), date and hour as may be specified in the respective notices or waivers of notice of such meetings. Special meetings of the Board of Directors may be called on 24 hours’ notice, if notice is given to each Director personally or by telephone or telegram, or on five days’ notice, if notice is mailed to each Director, addressed to him at his usual place of business. Notice of any special meeting need not be given to any Director who attends such meeting without protesting the lack of notice to him, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice, whether before or after such meeting, and any business may be transacted thereat.

Section 2.6 Quorum; Voting. At all meetings of the Board of Directors, the presence of a majority of the total authorized number of directors shall constitute a quorum for the transaction of business. Except as otherwise required by law, the vote of a majority of the Directors present at any meeting at which a quorum is present shall be the act of the Board of Directors.

Section 2.7 Adjournment. A majority of the Directors present, whether or not a quorum is present, may adjourn any meeting of the Board of Directors to another time or place. No notice need be given of any adjourned meeting unless the time and place of the adjourned meeting are not announced at the time of the adjournment, in which case notice conforming to the requirements of Section 2.5 shall be given to each Director.

Section 2.8 Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing, and such writing or writings are filed with the minutes of proceedings of the Board of Directors.

Section 2.9 Regulations; Manner of Acting. To the extent consistent with applicable law, the Certificate of Incorporation and these By-Laws, the Board of Directors may adopt such rules and regulations for the conduct of meetings of the Board of Directors and for the management of the property, affairs and business of the Corporation as the Board of Directors may deem appropriate. The Directors shall act only as a Board, and the individual Directors shall have no power as such.

Section 2.10 Action by Telephonic Communications. Members of the Board of Directors may participate in a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participating in a meeting pursuant to this provision shall constitute presence in person at such meeting.

Section 2.11 Resignations. Any Director may resign at any time by delivering a written notice of resignation, signed by such Director, to the President or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery.

Section 2.12 Removal of Directors. Any Director may be removed at any time, either for or without cause, upon the affirmative vote of the holders of a majority of the outstanding shares of stock of the Corporation entitled to vote for the election of such Director. Any vacancy in the Board of Directors caused by any such removal may be filled at such meeting by the stockholders entitled to vote for the election of the Director so removed. If such stockholders do not fill such vacancy at such meeting (or in the written instrument effecting such removal, if such removal was effected by consent without a meeting, such vacancy may be filled in the manner provided in Section 2.13 of these By-Laws.

Section 2.13 Vacancies and Newly Created Directorships. If any vacancies shall occur in the Board of Directors, by reason of death, resignation, removal or otherwise, or if the authorized number of Directors shall be increased, the Directors then in office shall continue to act, and such vacancies and newly created directorships may be filled by a majority of the Directors then in office, although less than a quorum. A Director elected to fill a vacancy or a newly created directorship shall hold office until his successor has been elected and qualified or until his earlier death, resignation or removal. Any such vacancy or newly created directorship may also be filled at any time by vote of the stockholders.

Section 2.14 Compensation. The amount, if any, which each Director shall be entitled to receive as compensation for his services as such shall be fixed from time to time by resolution of the Board of Directors.

Section 2.15 Reliance on Accounts and Reports, etc. A Director, or a member of any Committee designated by the Board of Directors shall, in the performance of his duties, be fully protected in relying in good faith upon the records of the Corporation and upon information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or Committees designated by the Board of Directors, or by any other person as to the matters the member personally believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

ARTICLE III

EXECUTIVE COMMITTEE AND OTHER COMMITTEES

Section 3.1 How Constituted. The Board of Directors may designate one or more Committees, including an Executive Committee, each such Committee to consist of such number of Directors as from time to time may be fixed by the Board of Directors. The Board of Directors may designate one or more Directors as alternate members of any such Committee, who may replace any absent or disqualified member or members at any meeting of such Committee. Thereafter, members (and alternate members, if any) of each such Committee may be designated at the annual meeting of the Board of Directors. Any such Committee may be abolished or redesignated

from time to time by the Board of Directors. Each member (and each alternate member) of any such Committee (whether designated at an annual meeting of the Board of Directors or to fill a vacancy or otherwise) shall hold office until his successor shall have been designated or until he shell cease to be a Director, or until his earlier death, resignation or removal.

Section 3.2 Powers. During the intervals between the meetings of the Board of Directors, the Executive Committee, except as otherwise provided in this section, shall have and may exercise all powers and authority of the Board of Directors in the management of the property, affairs and business of the Corporation, including the power to declare dividends and to authorize the issuance of stock. Each such other Committee, except as otherwise provided in this section, shall have and may exercise such powers of the Board of Directors. Neither the Executive Committee nor any such other Committee shall have the power of authority:

(a) to approve or adopt or recommend to stockholders, any action or matter required by law to be submitted to the stockholders for approval; or

(b) to adopt, amend or repeal any By-law of the Corporation.

The Executive Committee shall have, and any such other Committee may be granted by the Board of Directors, power to authorize the seal of the Corporation to be affixed to any or all papers which may require it.

Section 3.3 Proceedings. Each such Committee may fix its own rules of procedure and may meet at such place (within or without the State of Delaware), at such time and upon such notice, if any, as it shall determine from time to time. Each such Committee shall keep minutes of its proceedings and shall report such proceedings to the Board of Directors at the meeting of the Board of Directors next following any such proceedings.

Section 3.4 Quorum and Manner of Acting. Except as may be otherwise provided in the resolution creating such Committee, at all meetings of any Committee, the presence of members (or alternate members) constituting a majority of the total authorized membership of such Committee shall constitute a quorum for the transaction of business. The act of the majority of the members present at any meeting at which a quorum is present shall be the act of such Committee. Any action required or permitted to be taken without a meeting, if all members of such Committee shall consent to such action in writing and such writing or writings are filed with the minutes of the proceedings of the Committee. The members of any such Committee shall act only as a Committee, and the individual members of such Committee shall have no power as such.

Section 3.5 Action by Telephonic Communications. Members of any Committee designated by the Board of Directors may participate in a meeting of such Committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participating in a meeting pursuant to this

provision shall constitute presence in person at such meeting.

Section 3.6 Absent or Disqualified Members. In the absence or disqualification of a member of any Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

Section 3.7 Resignations. Any member (and any alternate member) of any Committee may resign at any time by delivering a written notice of resignation, signed by such member, to the Chairman or the President. Unless otherwise specified therein, such resignation shall take effect upon delivery.

Section 3.8 Removal. Any member (and any alternate member) of any Committee may be removed at any time, either for or without cause, by resolution adopted by a majority of the whole Board of Directors.

Section 3.9 Vacancies. If any vacancy shall occur in any Committee, by reason of disqualification, death, resignation, removal or otherwise, the remaining members (and any alternate members) shall continue to act, and any such vacancy may be filled by the Board of Directors.

ARTICLE IV

OFFICERS

Section 4.1 Number. The officers of the Corporation shall be chosen by the Board of Directors and shall be a President, one or more Vice Presidents, a Secretary and a Treasurer. The Board of Directors also may elect one or more Assistant Secretaries and Assistant Treasurers in such numbers as the Board of Directors may determine. Any number of offices may be held by the same person. No officer need be a Director of the Corporation.

Section 4.2 Election. Unless otherwise determined by the Board of: Directors, the officers of the Corporation shall be elected by the Board of Directors at the annual meeting of the Board of Directors, and shall be elected to hold office until the next succeeding annual meeting of the Board of Directors. In the event of the failure to elect officers at such annual meeting, officers may be elected at any regular or special meeting of the Board of Directors. Each officer shall hold office until his successor has been elected and qualified, or until his earlier death, resignation or removal.

Section 4.3 Salaries. The salaries of all officers and agents of the Corporation

shall be fixed by the Board of Directors.

Section 4.4 Removal and Resignation. Vacancies. Any officer may be removed for or without cause at any time by the Board of Directors. Any officer may resign at any time by delivering a written notice of resignation, signed by such officer, to the Board of Directors or the President. Unless otherwise specified therein, such resignation shall take effect upon delivery. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise, shall be filled by the Board of Directors.

Section 4.5 Authority and Duties of Officers. The officers of the Corporation shall have such authority and shall exercise such powers and perform such duties as may be specified in these By-Laws, except that in any event each officer shall exercise such powers and perform such duties as may be required by law.

Section 4.6 The President. The President shall preside at all meetings of the stockholders and directors at which he is present, shall be the chief executive officer and the chief operating officer of the Corporation, shall have general control and supervision of the policies and operations of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall manage and administer the Corporation’s business and affairs and shall also perform all duties and exercise all powers usually pertaining to the office of a chief executive officer and a chief operating officer of a corporation. He shall have the authority to sign, in the name and on behalf of the Corporation, checks, orders, contracts, leases, notes, drafts and other documents and instruments in connection with the business of the Corporation, and together with the Secretary or an Assistant Secretary, conveyances of real estate and other documents and instruments to which the seal of the Corporation is affixed. He shall have the authority to cause the employment or appointment of such employees and agents of the Corporation as the conduct of the business of the Corporation may require, to fix their compensation, and to remove or suspend any employee or agent elected or appointed by the President or the Board of Directors. The President shall perform such other duties and have such other powers as the Board of Directors or the Chairman may from time to time prescribe.

Section 4.7 The Vice President. Such Vice President shall perform such duties and exercise such powers as may be assigned to him from time to time by the President. In the absence of the President, the duties of the President shall be performed and his powers may be exercised by such Vice President as shall be designated by the President, or failing such designation, such duties shall be performed and such powers may be exercised by each Vice President in the order of their earliest election to that office; subject in any case to review and superseding action by the President.

Section 4.8 The Secretary. The Secretary shall have the following powers and duties:

(a) He shall keep or cause to be kept a record of all the proceedings of the meetings of the stockholders and of the Board of Directors in books provided for that purpose.

(b) He shall cause all notices to be duly given in accordance with the provisions of these By-Laws and as required by law.

(c) Whenever any Committee shall be appointed pursuant to a resolution of the Board of Directors, he shall furnish a copy of such resolution to the members of such Committee.

(d) He shall be the custodian of the records and of the seal of the Corporation and cause such seal (or a facsimile thereof) to be affixed to all certificates representing shares of the Corporation prior to the issuance thereof and to all instruments the execution of which on behalf of the Corporation under its seal shall have been duly authorized in accordance with these By-Laws, and when so affixed he may attest the same.

(e) He shall properly maintain and file all books, reports, statements, certificates and all other documents and records required by law, the Certificate of Incorporation or these By-Laws.

(f) He shall have charge of the stock books and ledgers of the Corporation and shall cause the stock and transfer books to be kept in such manner as to show at any time the number of shares of stock of the Corporation of each class issued and outstanding, the names (alphabetically, arranged) and the addresses of the holders of record of such shares, the number of shares held by each holder and the date as of which each became such holder of record.

(g) He shall sign (unless the Treasurer, an Assistant Treasurer or Assistant Secretary shall have signed) certificates representing shares of the Corporation the issuance of which shall have been authorized by the Board of Directors.

(h) He shall perform, in general, all duties incident to the office of secretary and such other duties as may be specified in these By-Laws or as may be assigned to him from time to time by the Board of Directors, or the President.

Section 4.9 The Treasurer. The Treasurer shall be the chief financial officer of the Corporation and shall have the following powers and duties:

(a) He shall have charge and supervision over and be responsible for the moneys, securities, receipts and disbursements of the Corporation, and shall keep or cause to be kept full and accurate records of all receipts of the Corporation.

(b) He shall cause the moneys and other valuable effects of the Corporation to be deposited in the name and to the credit of the corporation in such banks or trust companies or with such bankers or other depositaries as shall be selected in accordance with section 8.5 of these By-Laws.

(c) He shall cause the moneys of the Corporation to be disbursed by checks or drafts (signed as provided in section 8.6 of these By-Laws) upon the authorized depositaries of the Corporation and cause to be taken and preserved proper vouchers for all moneys disbursed.

(d) He shall render to the Board of Directors or the President, whenever requested, a statement of the financial condition of the Corporation and of all his transactions as Treasurer, and render a full financial report at the annual meeting of the stockholders, if called upon to do so.

(e) He shall be empowered from time to time to require from all officers or agents of the Corporation reports or statements giving such information as he may desire with respect to any and all financial transactions of the Corporation.

(f) He may sign (unless an Assistant Treasurer or the Secretary or an Assistant Secretary shall have signed) certificates representing stock of the Corporation the issuance of which shall have been authorized by the Board of Directors.

(g) He shall perform, in general, all duties incident to the office of treasurer and such other duties as may be specified in these By-Laws or as may be assigned to him from time to time by the Board of Directors, or the President.

Section 4.10 Additional Officers. The Board of Directors may appoint such other officers and agents as it may deem appropriate, and such other officers and agents shall hold their officers for such terms and shall exercise such powers and perform such duties as may be determined from time to time by the Board of Directors. The Board of Directors from time to time may delegate to any officer or agent the power to appoint, subordinate officers or agents and to prescribe their respective rights, terms of office, authorities and duties. Any such officer or agent may remove any such subordinate officer or agent appointed by him, for or without cause.

Section 4.11 Security. The Board of Directors may require any officer, agent or

employee of the Corporation to provide security far the faithful performance of his duties, in such amount and of such character as may be determined from time to time by the Board of Directors.

ARTICLE V

CAPITAL STOCK

Section 5.1 Certificates of stock. Uncertificated Shares. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the stock of the Corporation shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until each certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock in the Corporation represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the Corporation, by the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, representing the number of shares registered in certificate form. Such certificate shall be in such form as the Board of Directors may determine, the Client consistent with applicable law, the Certificate of Incorporation and these By-Laws.

Section 5.2 Signatures; Facsimile. All of such signatures on the certificate may be a facsimile, engraved or printed, to the extent permitted by law. In case any officer, transfer agent or registrar who has signed, or whose facsimile signature as been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

Section 5.3 Lost, Stolen or Destroyed Certificates. The Board of Directors may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon delivery to the Board of Directors of an affidavit of the owner or owners of such certificate, setting forth such allegation. The Board of Directors may require the owner of such lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate.

Section 5.4 Transfer of Stock. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares, duly endorsed or accompanied by appropriate evidence of succession, assignment or authority to transfer, the Corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books, Within a reasonable time after the transfer of uncertificated stock, the Corporation

shall send, to the registered owner thereof a written notice containing the information required to be set.

Forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General Corporation Law of the State of Delaware. Subject to the provisions of the Certificate of Incorporation and these By-Laws, the Board of Directors may prescribe such additional rules and regulations as it may deem appropriate relating to the issue, transfer and registration of shares of the Corporation.

Section 5.5 Record Date. In order to determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board of Directors, and which shall not be more than sixty nor less than ten days before the date of such meeting. A determination of stockholders of record entitled to notice of or to vote at a meeting, of stockholders shall apply to any adjournment of the meeting, provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights of the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

Section 5.6 Registered Stockholders. Prior to due surrender of a certificate for registration of transfer, the Corporation may treat the registered owner as the person exclusively entitled to receive dividends and other distributions, to vote, to receive notice and otherwise to exercise all the rights and powers of the owner of the shares represented by such certificate, and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have notice of such claim or interests. Whenever any transfer of shares shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer if, when the certificates are presented to the Corporation for transfer or uncertificated shares are requested to be transferred, both the transferor and transferee request the Corporation to do so.

Section 5.7 Transfer Agent and Registrar. The Board of Directors may appoint one or more transfer agents and one or more registrars, and may require all certificates representing shares to bear the signature of any such transfer agents or registrars.

ARTICLE VI

INDEMNIFICATION

Section 6.1 Nature of Indemnity. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer, of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, and may indemnify any person who was or is a party or is threatened to be made a party to such an action, suit or proceeding by reason of the fact that he is or was or has agreed to become an employee or agent of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fixes amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding had no reasonable cause to believe his conduct was unlawful; except that in the case of an action or suit by or in the right of the Corporation to procure a judgment in its favor (1) such indemnification shall be limited to expenses (including attorneys’ fees) actually and reasonably incurred by such person in the defense or settlement of such action or suit, and (2) no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the

extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper.

The termination of any action, suit or proceeding by judgment, order settlement, conviction, or upon a plea of nolo contender or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

Section 6.2 Successful Defense. To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in section 6.1 hereof or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys fees) actually and reasonably incurred by him in connection therewith.

Section 6.3 Determination That Indemnification Is Proper. Any indemnification of a director or officer of the Corporation under Section 6.1 hereof (unless ordered by a court) shall be made by the Corporation unless a determination is made that indemnification of the director or officer is not proper in the circumstances because he has not met the applicable standard of conduct set forth in section 6.1 hereof. Any indemnification of an employee or agent of the Corporation under Section 6.1 hereof (unless ordered by a court) may be made by the Corporation Upon a determination that indemnification of the employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 6.1 hereof. Any such determination shall be made (1.) by a majority vote of the Directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (3) by the stockholders.

Section 6.4 Advance Payment of Expenses. Expenses (including attorneys’ fees) incurred by a director or officer in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article. Such expenses (including attorneys’ fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. The Board of Directors may authorize the Corporation’s counsel to represent such director, officer, employee or agent in any action, suit or proceeding, whether or not the Corporation is a party to such action, suit of proceeding.

Section 6.5 Procedure for Indemnification of Directors and Officers. Any indemnification of a director or officer of the Corporation under sections 6.1 and 6.2, or advance

of costs, charges and expenses to a director or officer under section 6.4 of this Article, shall be made promptly, and in any event within 30 days, upon the written request of the director or officer. If a determination by the Corporation that the director or officer is entitled to indemnification pursuant to this Article is required, and the Corporation fails to respond within sixty days to a written request for indemnity, the Corporation shall be deemed to have approved such request. If the Corporation denies a written request for indemnity or advancement of expenses, in whole or in part, or if payment in full pursuant to such request is not made within 30 days, the right to indemnification or advances as granted by this Article shall be enforceable by the director or officer in any court of competent jurisdiction. Such person’s costs and expenses incurred in connection with successfully establishing his right to Indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses under section 6.4 of this Article where the required undertaking, if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in section 6.1 of this Article, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he his met the applicable standard of conduct set forth in Section 6.1 of this Article, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

Section 6.6 Survival; Preservation of Other Rights. The foregoing indemnification provisions shall be deemed to be a contract between the Corporation and each director, officer, employee and agent who serves in any such capacity at any time while these provisions as well as the relevant provisions of the Delaware Corporation Law are in effect and any repeal or modification thereof shall not affect any right or obligation then existing with respect to any state of facts then or previously existing or any action, suit or proceeding previously or thereafter brought or threatened based in whale or in part upon any such state of facts. Such a “contract right” may not be modified retroactively without the consent of such director, officer, employee or agent.

The indemnification provided by this Article VI shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

Section 6.7 Insurance. The Corporation shall purchase and maintain insurance

on behalf of any person who is or was or has agreed to become a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him or on his behalf in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article, provided that such insurance is available on acceptable terms, which determination shall be made by a vote of a majority of the entire Board of Directors.

Section 6.8 Severability. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director or officer and may indemnify each employee or agent of the Corporation as to costs, charges and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the corporation, to the fullest extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law.

ARTICLE VII

OFFICES

Section 7.1 Registered Office. The registered office of the Corporation in the State of Delaware shall be located at Corporation Service Company, 1013 Centre Road in the City of Wilmington, County of New Castle.

Section 7.2 Other Offices. The Corporation may maintain offices or places of business at such other locations within or without the State of Delaware as the Board of Directors may from time to time determine or as the business of the Corporation may require.

ARTICLE VIII

GENERAL PROVISIONS

Section 8.1 Dividends. Subject to any applicable provisions of law and the Certificate of Incorporation, dividends upon the shares of the Corporation may be declared by the Board of Directors at any regular or special meeting of the Board of Directors and any such dividend may be paid in cash, property, or shares of the Corporation’s Capital Stock.

A member of the Board of Directors, or a member of any Committee designated by; the Board of Directors shall be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or Committees of the Board of Directors, or by any other person as to matters the Director reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation, as to the value and amount of the assets, liabilities and/or net profits of the Corporation, or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid. [Sections 172, 173.]

Section 8.2 Reserves. There may be set aside out of any funds of the corporation available for dividends such sum or sums as the Board Of Directors from time to time, in its absolute discretion, thinks proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall think conducive to the interest of the Corporation, and the Board of Directors may similarly modify or abolish any such reserve. [Section 171.1]

Section 8.3 Execution of Instruments. The President, any Vice president, the secretary or the Treasurer may enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. The Board of Directors or the President may authorize any other officer or agent to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. Any such authorization may be general or limited to specific contracts or instruments.

Section 8.4 Corporate Indebtedness. No loan shall be contracted on behalf of the Corporation, and no evidence of indebtedness shall be issued in its name, unless authorized by the Board of Directors or the President. Such authorization may be general or confined to specific instances. Loans so authorized may be effected at any time for the Corporation from any bank, trust company or other Institution, or from any firm, corporation or individual. All bonds, debentures, notes and other obligations or evidences of indebtedness of the Corporation issued for such loans shall be made, executed and delivered as the Board of Directors or the President shall authorize. When so authorized by the Board of Directors or the President, any part of or all the properties, including contract rights, assets, business or good will of the Corporation, whether then owned or thereafter acquired, may be mortgaged, pledged, hypothecated or conveyed or assigned in trust as security for the payment of such bonds, debentures, notes and other obligations or evidences of indebtedness of the Corporation, and of the interest thereon, by instruments executed and delivered in the name of the Corporation.

Section 8.5 Deposits. Any funds of the Corporation may be deposited from time to time in such banks, trust companies or other depositaries as may be determined by the Board of Directors or the President, or by such officers or agents as may be authorized by the Board of Directors or the President to make such determination.

Section 8.6 Checks. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such agent or agents of the Corporation, and in such manner, as the Board of Directors or the President from time to time may determine.

Section 8.7 Sale, Transfer, etc. of Securities. To the extent authorized by the Board of Directors or by the President, any Vice President, the Secretary or the Treasurer or any other officers designated by the Board of Directors or the President may sell, transfer, endorse, and assign any shares of stock, bonds or other securities owned by or held in the name of the Corporation, and may make, execute and deliver in the name of the Corporation, under its corporate seal, any instruments that may be appropriate to effect any such sale, transfer, endorsement or assignment.

Section 8.8 Voting as Stockholder. Unless otherwise determined by resolution of the Board of Directors, the President or any Vice President shall have full power and authority on behalf of the Corporation to attend any meeting of stockholders of any corporation in which the Corporation may hold stock, and to act, vote (or execute proxies to vote) and exercise in person or by proxy all other rights, powers and privileges incident to the ownership of such stock. Such officers acting on behalf of the Corporation shall have full power and authority to execute any instrument expressing consent to or dissent from any action of any such corporation without a meeting. The Board of Directors may by resolution from time to time confer such power and authority upon any other person or persons.

Section 8.9 Final Year. The fiscal year of the Corporation shall commence on the first day of January of each year (except for the Corporation’s first fiscal year which shall commence on the date of incorporation) and shall terminate in each case on December 31.

Section 8.10 Seal. The seal of the Corporation shall be circular in form and shall contain the name of the Corporation, the year of its incorporation and the words “Corporate Seal” and “Delaware”. The form of such seal shall be subject to alteration by the Board of Directors. The seal may be used by causing it or a facsimile thereof to be impressed, affixed or reproduced, or may be used in any other lawful manner.

Section 8.11 Books and Records; Inspection. Except to the extent otherwise required by law, the books and records of the Corporation shall be kept at such place or places within or without the State of Delaware as may be determined from time to time by the Board of Directors.

ARTICLE IX

AMENDMENT OF BY-LAWS

Section 9.1. Amendment. These By-Laws may be amended, altered or repealed.

(a) by resolution adopted by a majority of the Board of Directors at any special or regular meeting of the Board if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting; or

(b) at any regular or special meeting of the stockholders if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting. [Section 109(a).]

ARTICLE X

CONSTRUCTION

Section 10.1 Construction. In the event of any conflict between the provisions of these By-Laws as in effect from time to time and the provisions of the certificate of incorporation of the Corporation as in effect from time to time, the provisions of such certificate of incorporation shall be controlling.

EX-4.1 29 a2155511zex-4_1.htm EXHIBIT 4.1

Exhibit 4.1

EXECUTION DRAFT

INDENTURE,

Dated as of November 30, 2004,

among

ALTRA INDUSTRIAL MOTION INC.,

as Issuer,

THE GUARANTORS NAMED HEREIN,

as Guarantors,

and

THE BANK OF NEW YORK TRUST COMPANY, N.A.

as Trustee and as Collateral Agent

9% SENIOR SECURED NOTES DUE 2011

CROSS REFERENCE TABLE

TIA Section		Indenture Section

310	(a)(1)	7.10(a)
	(a)(2)	7.10(a)
	(a)(3)	7.10(a)
	(a)(4)	N.A.
	(a)(5)	7.10(a)
	(b)	7.03; 7.08; 7.10(a)
	(c)	N.A.
311	(a)	7.03; 7.11
	(b)	7.03; 7.11
312	(a)	2.05
	(b)	7.07; 11.03
	(c)	11.03
313	(a)	7.06
	(b)	7.06
	(c)	7.06
	(d)	7.06
314	(a)	4.06; 4.21
	(b)	12.02
	(c)(1)	4.06; 11.04
	(c)(2)	11.04
	(c)(3)	4.06
	(d)	12.03(c)
	(e)	11.05
	(f)	N.A.
315	(a)	7.01(b)
	(b)	7.05
	(c)	7.01(a)
	(d)	7.01(c)
	(e)	6.11
316	(a)(last sentence)	2.09
	(a)(1)(A)	6.05
	(a)(1)(B)	6.04
	(a)(2)	N.A.
	(b)	6.07
	(c)	9.04
317	(a)(1)	6.08
	(a)(2)	6.09
	(b)	2.04
318	(a)	11.01
	(b)	N.A.
	(c)	11.01

N.A. means Not Applicable

NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of this Indenture.

TABLE OF CONTENTS

ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE

	Section 1.01	Definitions.

	Section 1.02	Incorporation by Reference of TIA.

	Section 1.03	Rules of Construction.

ARTICLE TWO THE NOTES

	Section 2.01	Form and Dating.

	Section 2.02	Execution and Authentication; Aggregate Principal Amount.

	Section 2.03	Registrar and Paying Agent.

	Section 2.04	Obligations of Paying Agent.

	Section 2.05	Holder Lists.

	Section 2.06	Transfer and Exchange.

	Section 2.07	Replacement Notes.

	Section 2.08	Outstanding Notes.

	Section 2.09	Treasury Notes; When Notes are Disregarded.

	Section 2.10	Temporary Notes.

	Section 2.11	Cancellation.

	Section 2.12	CUSIP Numbers.

	Section 2.13	Deposit of Moneys.

	Section 2.14	Book-Entry Provisions for Global Notes.

	Section 2.15	Special Transfer Provisions.

	Section 2.16	Transfers of Global Notes and Physical Notes.

ARTICLE THREE REDEMPTION

	Section 3.01	Optional Redemption.

	Section 3.02	Selection of Notes to be Redeemed.

	Section 3.03	Notice of Redemption.

	Section 3.04	Effect of Notice of Redemption.

	Section 3.05	Deposit of Redemption Price.

	Section 3.06	Notes Redeemed in Part.

ARTICLE FOUR COVENANTS

	Section 4.01	Payment of Notes.

	Section 4.02	Maintenance of Office or Agency.

	Section 4.03	Corporate Existence.

	Section 4.04	Payment of Taxes and Other Claims.

	Section 4.05	Maintenance of Properties and Insurance; Compliance with Laws.

	Section 4.06	Compliance Certificate; Notice of Default.

	Section 4.07	Waiver of Stay, Extension or Usury Laws.

	Section 4.08	Limitation on Incurrence of Additional Indebtedness.

	Section 4.09	Limitation on Restricted Payments.

	Section 4.10	Limitation on Asset Sales.

	Section 4.11	Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.

	Section 4.12	Limitation on Issuances and Sales of Capital Stock of Subsidiaries.

	Section 4.13	Limitation on Liens.

	Section 4.14	Limitations on Transactions with Affiliates.

	Section 4.15	Additional Subsidiary Guarantees.

	Section 4.16	Impairment of Security Interest.

	Section 4.17	Real Estate Mortgages and Filings.

	Section 4.18	Leasehold Mortgages and Filings; Landlord Waivers.

	Section 4.19	Conduct of Business.

	Section 4.20	Reports to Holders.

	Section 4.21	Payments for Consent.

	Section 4.22	Repurchase Upon Change of Control.

	Section 4.23	Additional Interest.

ARTICLE FIVE SUCCESSOR CORPORATION

	Section 5.01	Merger, Consolidation and Sale of Assets.

	Section 5.02	Successor Entity Substituted.

ARTICLE SIX DEFAULT AND REMEDIES

	Section 6.01	Events of Default.

	Section 6.02	Acceleration.

	Section 6.03	Other Remedies.

	Section 6.04	Waiver of Past Defaults.

	Section 6.05	Control by Majority.

	Section 6.06	Limitation on Suits.

	Section 6.07	Rights of Holders to Receive Payment.

	Section 6.08	Collection Suit by Trustee or Collateral Agent.

	Section 6.09	Trustee May File Proofs of Claim.

	Section 6.10	Priorities.

	Section 6.11	Undertaking for Costs.

	Section 6.12	Restoration of Rights and Remedies.

ARTICLE SEVEN TRUSTEE

	Section 7.01	Duties of Trustee.

	Section 7.02	Rights of Trustee.

	Section 7.03	Individual Rights of Trustee.

iii

	Section 7.04	Trustee’s Disclaimer.

	Section 7.05	Notice of Default.

	Section 7.06	Reports by Trustee to Holders.

	Section 7.07	Compensation and Indemnity.

	Section 7.08	Replacement of Trustee.

	Section 7.09	Successor Trustee by Merger, Etc.

	Section 7.10	Eligibility; Disqualification.

	Section 7.11	Preferential Collection of Claims Against Company.

	Section 7.12	Trustee as Paying Agent and Collateral Agent.

	Section 7.13	Co-Trustees , Co-Collateral Agent and Separate Trustees and Collateral Agent.

	Section 7.14	Form of Documents Delivered to Trustee.

ARTICLE EIGHT SATISFACTION AND DISCHARGE OF INDENTURE

	Section 8.01	Legal Defeasance and Covenant Defeasance.

	Section 8.02	Satisfaction and Discharge.

	Section 8.03	Survival of Certain Obligations.

	Section 8.04	Acknowledgment of Discharge by Trustee.

	Section 8.05	Application of Trust Moneys.

	Section 8.06	Repayment to the Company; Unclaimed Money.

	Section 8.07	Reinstatement.

ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS

	Section 9.01	Without Consent of Holders.

	Section 9.02	With Consent of Holders.

	Section 9.03	Compliance with TIA.

	Section 9.04	Revocation and Effect of Consents.

	Section 9.05	Notation on or Exchange of Notes.

	Section 9.06	Trustee to Sign Amendments, Etc.

ARTICLE TEN GUARANTEE

	Section 10.01	Guarantee.

	Section 10.02	Release of a Guarantor.

	Section 10.03	Limitation of Guarantor’s Liability.

	Section 10.04	Guarantors May Consolidate, etc., on Certain Terms.

	Section 10.05	Contribution.

	Section 10.06	Waiver of Subrogation.

	Section 10.07	Waiver of Stay, Extension or Usury Laws.

	Section 10.08	Evidence of Guarantee.

ARTICLE ELEVEN MISCELLANEOUS

	Section 11.01	TIA Controls.

	Section 11.02	Notices.

	Section 11.03	Communications by Holders with Other Holders.

	Section 11.04	Certificate and Opinion as to Conditions Precedent.

	Section 11.05	Statements Required in Certificate or Opinion.

	Section 11.06	Rules by Trustee, Paying Agent, Registrar.

	Section 11.07	Legal Holidays.

	Section 11.08	Governing Law.

	Section 11.09	No Adverse Interpretation of Other Agreements.

	Section 11.10	No Recourse Against Others.

	Section 11.11	Successors.

	Section 11.12	Duplicate Originals.

	Section 11.13		Severability.

	Section 11.14		Waiver of Jury Trial.

ARTICLE TWELVE SECURITY

	Section 12.01		Grant of Security Interest.

	Section 12.02		Recording and Opinions.

	Section 12.03		Release of Collateral.

	Section 12.04		Specified Releases of Collateral.

	Section 12.05		Release upon Satisfaction or Defeasance of all Outstanding Obligations.

	Section 12.06		Form and Sufficiency of Release.

	Section 12.07		Purchaser Protected.

	Section 12.08		Authorization of Actions to be Taken by the Collateral Agent Under the Collateral Agreements.

	Section 12.09		Authorization of Receipt of Funds by the Trustee Under the Collateral Agreements.

	Section 12.10		Intercreditor Agreement.

Exhibit A		—	Form of Initial Note
Exhibit B		—	Form of Exchange Note
Exhibit C		—	Form of Legend for Global Notes
Exhibit D		—	Form of Certificate to be Delivered in Connection with Transfers to Non-QIB Accredited Investors
Exhibit E		—	Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S
Exhibit F-1		—	Form of Landlord Waiver
Exhibit F-2		—	Form of Bailee Waiver
Exhibit F-3		—	Form of Consignee Waiver

NOTE: This Table of Contents shall not, for any purpose, be deemed to be part of this Indenture.

INDENTURE, dated as of November 30, 2004, among Altra Industrial Motion, a Delaware corporation (the “Company”), the Guarantors (as herein defined) and The Bank of New York Trust Company, N.A., as Trustee (in such capacity, the “Trustee”) and Collateral Agent (in such capacity, the “Collateral Agent”).

WITNESSETH:

WHEREAS, the Company and the Guarantors (with respect to the Guarantees) have duly authorized the creation of the Notes and, to provide therefor, the Company and the Guarantors have duly authorized the execution and delivery of this Indenture; and

WHEREAS, all things necessary to make the Notes, when duly issued and executed by the Company, and authenticated and delivered hereunder, the valid obligations of the Company, and to make this Indenture a valid and binding agreement of each of the Company and the Guarantors, have been done.

NOW, THEREFORE, each party hereto agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders:

Section 1.01 Definitions.

“Acceleration Notice” has the meaning set forth in Section 6.02(a).

“Acquired Indebtedness” means Indebtedness of a Person or any of its Subsidiaries:

“Additional Interest” has the meaning set forth in the Registration Rights Agreement.

“Additional Notes” means all Notes issued after the Issue Date (other than pursuant to Sections 2.06, 2.07, 2.10 and 3.06 of this Indenture and other than Exchange Notes) from time to time in accordance with the terms of this Indenture, including, without limitation, the provisions of Section 2.02.

“Administrative Agent” has the meaning set forth in the definition of the term “Credit Agreement.”

“Affiliate” means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; provided, that Beneficial Ownership of 10% or more of the Voting Stock of any Person shall be deemed to be control of such Person. The terms “controlling” and “controlled” have meanings correlative of the foregoing.

“Affiliate Transaction” has the meaning set forth in Section 4.14.

“Agent” means any Registrar, Paying Agent or co-Registrar.

“Agent Members” has the meaning set forth in Section 2.14(a) and means, with respect to the Depository, Euroclear or Clearstream, a Person who has an account with the Depository, Euroclear or Clearstream, respectively (and with respect to the Depository, shall include Euroclear and Clearstream).

“Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depository, Euroclear and Clearstream that apply to such transfer or exchange.

“Asset Acquisition” means:

“Asset Sale” means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business, consistent with past practice), assignment or other transfer of:

provided, that Asset Sales shall not include:

“Authenticating Agent” has the meaning set forth in Section 2.02.

“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended, and codified as 11 U.S.C. §§101 et seq.

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns,” “Beneficially Owned” and “Beneficial Ownership” have meanings correlative to the foregoing.

“Board of Directors” means, as to any Person, the board of directors or similar governing body of such Person or any duly authorized committee thereof.

“Board Resolution” means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee.

“Business Day” means a day that is not a Legal Holiday.

“Capital Stock” means:

“Capitalized Lease Obligation” means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP.

“Cash Equivalents” means:

“Change of Control” means the occurrence of one or more of the following events:

“Change of Control Offer” has the meaning set forth in Section 4.22.

“Change of Control Payment Date” has its meaning set forth in Section 4.22.

“Clearstream” means Clearstream Banking, societe anonyme.

“Collateral” shall mean collateral as such term is defined in the Security Agreement, all property mortgaged under the Mortgages and any other property, whether now owned or hereafter acquired, upon which a Lien securing the Obligations or other obligations is granted or purported to be granted under any Collateral Agreement.

“Collateral Agent” means the collateral agent and any successor under this Indenture.

“Collateral Agreements” means, collectively, the Intercreditor Agreement, the Security Agreement, each Mortgage and the Control Agreement, the Patent Security Agreement, and the Trademark Security Agreement executed and delivered pursuant to the Security Agreement, in each case, as the same may be in force from time to time.

“Common Stock” of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person’s common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock.

“Company” has the meaning set forth in the preamble to this Indenture.

“Consolidated EBITDA” means, for any period, the sum (without duplication) of:

all as determined on a consolidated basis in accordance with GAAP.

“Consolidated Fixed Charge Coverage Ratio” means the ratio of Consolidated EBITDA during the four consecutive full fiscal quarters (the “Four Quarter Period”) most recently ending on or prior to the date of the transaction or event giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio for which financial statements are available (the “Transaction Date”) to Consolidated Fixed Charges for the Four Quarter Period.

For purposes of this definition, “Consolidated EBITDA” and “Consolidated Fixed Charges” shall be calculated after giving effect on a pro forma basis for the period of such calculation to:

Furthermore, in calculating “Consolidated Fixed Charges” for purposes of determining the denominator (but not the numerator) of this “Consolidated Fixed Charge Coverage Ratio”:

“Consolidated Fixed Charges” means, with respect to any Person for any period, the sum, without duplication, of:

“Consolidated Interest Expense” means, with respect to any Person for any period, the aggregate of the interest expense of such Person and its consolidated Subsidiaries for such period, on a consolidated basis, as determined in accordance with GAAP, and including, without duplication, (a) all amortization or

accretion of original issue discount; (b) the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period; and (c) net cash costs under all Interest Swap Obligations (including amortization of fees).

“Consolidated Net Income” means, for any period, the aggregate net income (or loss) of the Company and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided, that there shall be excluded therefrom (to the extent otherwise included therein):

“Consolidated Non-cash Charges” means, with respect to any Person, for any period, the aggregate depreciation, amortization and other non-cash items and expenses of such Person and its consolidated Subsidiaries to the extent they reduce Consolidated Net Income of such Person for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charges constituting an extraordinary item or loss or any such charge that requires an accrual of or a reserve for cash charges for any future period).

“Corporate Trust Office” means (a) with respect to the Trustee, the office of The Bank of New York Trust Company, N.A. at which the trust created by this Indenture shall, at any particular time, be principally administered, which office is, at the date of this Indenture, located at 700 S. Flower Street, Suite 500, Los Angeles, California 90017 or (b) such other location located in the Borough of Manhattan in the City of New York, New York that is specified in writing by The Bank of New York Trust Company, N.A. to the Trustee for purposes of this Indenture.

“Covenant Defeasance” has the meaning set forth in Section 8.01(c).

“Credit Agreement” means the Credit Agreement, dated as of the Issue Date, among the Company and the lenders party thereto (together with their successors and assigns, the “Lenders”) and Wells Fargo Foothill, Inc. as administrative agent (in such capacity, together with its successors and assigns, the “Administrative Agent”), together with the related documents thereto (including, without limitation, any guarantee agreements and security documents), or any agreement extending the maturity of, refinancing, replacing, refunding, restating or otherwise restructuring (whether upon or at any time or from time to time after termination or otherwise) all or any portion of the Indebtedness under such agreement or document or any successor or replacement agreement or document and whether by the same or any other agent, lender or group of lenders, or institutional investors, providing for revolving credit loans, term loans, letters of credit or issuance of notes or any other debt, in each of the above cases as such agreements may be amended, supplemented or otherwise modified from time to time.

“Currency Agreement” means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any Restricted Subsidiary against fluctuations in currency values.

“CUSIP” has the meaning set forth in Section 2.12.

“Custodian” means any receiver, trustee, assignee, liquidator, sequestrator or similar official under the Bankruptcy Code or any other state or federal bankruptcy or insolvency law.

“Default” means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default.

“Depository” means DTC, its nominees and successors.

“Disqualified Capital Stock” with respect to any Person means that portion of any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event (other than an event that would constitute a Change of Control), matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof (except in each case, upon the occurrence of a Change of Control) on or prior to the first anniversary of the final maturity date of the Notes for cash or is convertible into or exchangeable for debt securities of the Company or its Subsidiaries at any time prior to such anniversary.

“Distribution Compliance Period” means the 40-day distribution compliance period as defined in Regulation S.

“Domestic Restricted Subsidiary” means, with respect to any Person, a Domestic Subsidiary of such Person that is a Restricted Subsidiary of such Person.

“Domestic Subsidiary” means, with respect to any Person, a Subsidiary of such Person that is not a Foreign Subsidiary of such Person.

“DTC” means The Depositary Trust Company, its nominees and successors.

“Equity Offering” means an underwritten public offering of Common Stock of the Company or any holding company of the Company (including Holdings) pursuant to a registration statement filed with the SEC (other than on Form S-8) or any private placement of Common Stock of the Company or any

holding company of the Company (including Holdings) to any Person other than issuances upon exercise of options by employees of any holding company, the Company or any of the Restricted Subsidiaries.

“Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear system.

“Event of Default” has the meaning set forth in Section 6.01.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto.

“Exchange Notes” means Notes issued in exchange for the Initial Notes or Additional Notes pursuant to the terms of a Registration Rights Agreement.

“Exchange Offer” means an exchange offer that may be made by the Company, pursuant to the Registration Rights Agreement, to exchange for any and all Notes a like aggregate principal amount of Notes having substantially identical terms to the Notes registered under the Securities Act.

“Fair Market Value” means, with respect to any asset or property, the price which could be negotiated in an arm’s length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value shall be determined by the Board of Directors of the Company acting in good faith and shall be evidenced by a Board Resolution.

“Foreign Restricted Subsidiary” means any Restricted Subsidiary that is organized under the laws of any jurisdiction other than the United States of America, any state thereof or the District of Columbia.

“Foreign Subsidiary” means, with respect to any Person, any Subsidiary of such Person that is organized under the laws of any jurisdiction other than the United States of America, any state thereof or the District of Columbia.

“Four Quarter Period” has the meaning set forth in the definition of “Consolidated Fixed Charge Coverage Ratio.”

“GAAP” means accounting principles generally accepted in the United States set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are in effect from time to time.

“Global Notes” means, collectively, the 144A Global Notes, the IAI Global Notes, the Regulation S Permanent Global Notes and the Regulation S Temporary Global Notes.

“Group” has the meaning set forth in the definition of the term “Change of Control.”

“Guarantee” has the meaning set forth in Section 10.01.

“Guarantor” means (1) each of the Company’s Domestic Restricted Subsidiaries existing on the Issue Date and (2) each of the Company’s Domestic Restricted Subsidiaries that in the future executes a supplemental indenture in which such Domestic Restricted Subsidiary agrees to be bound by the terms of the Indenture as a Guarantor; provided that any Person constituting a Guarantor as described above shall

cease to constitute a Guarantor when its respective Guarantee is released in accordance with the terms of the Indenture.

“Holder” means the Person in whose name a Note is registered on the registrar’s books.

“Holdings” means Altra Holdings, Inc.

“IAI Global Notes” has the meaning set forth in Section 2.01.

“incur” has the meaning set forth in Section 4.08.

“Indebtedness” means with respect to any Person, without duplication:

For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon,

or measured by, the Fair Market Value of such Disqualified Capital Stock, such Fair Market Value shall be determined reasonably and in good faith by the board of directors of the issuer of such Disqualified Capital Stock.

“Indemnified Party” has the meaning set forth in Section 7.07.

“Indenture” means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof.

“Indenture Documents” means, collectively, this Indenture, the Notes, the Guarantees, and the Collateral Agreements.

“Independent Financial Advisor” means a nationally recognized accounting, appraisal or investment banking firm: (1) that does not, and whose directors, officers and employees or Affiliates do not, have a direct or indirect financial interest in the Company; and (2) that, in the judgment of the Board of Directors of the Company, is otherwise independent and qualified to perform the task for which it is to be engaged.

“Initial Notes” means the 9% Senior Secured Notes due 2011 issued on the Issue Date.

“Initial Purchaser” means Jefferies & Company, Inc.

“Institutional Accredited Investor” means an institution that is an “accredited investor” as that term is defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

“Intercreditor Agreement” means the Intercreditor Agreement among the Administrative Agent, the Trustee, the Collateral Agent, the Company and the Guarantors, dated as of the Issue Date, as the same may be amended, supplemented or modified from time to time.

“Interest Payment Date” means June 1 and December 1 of each year, commencing June 1, 2005.

“Interest Swap Obligations” means the obligations of any Person pursuant to any arrangement with any other Person, whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such other Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements.

“Investment” in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business, consistent with past practice, that are required to be recorded in accordance with GAAP as accounts receivable on the balance sheet of the lender) or other extensions of credit (including by way of guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition for value of Capital Stock, Indebtedness or other similar instruments issued by such Person. If the Company or any Restricted Subsidiary issues, sells or otherwise disposes of any Capital Stock of a Person that is a Restricted Subsidiary such that, after giving effect thereto, such Person is no longer a Restricted Subsidiary, any Investment by the Company or any Restricted Subsidiary in such Person remaining after giving effect thereto will be deemed to be a new Investment at such time. The acquisition by the Company or any Restricted Subsidiary of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Company or such Restricted Subsidiary in such third Person at such time. Except as otherwise provided for herein, the

amount of an Investment shall be its fair market value at the time the Investment is made and without giving effect to subsequent changes in value.

For purposes of the definition of “Unrestricted Subsidiary,” the definition of “Restricted Payment” and the covenant described under Section 4.09:

“Issue Date” means November 30, 2004.

“Lease” has the meaning set forth in Section 4.18.

“Leased Premises” has the meaning set forth in Section 4.18.

“Legal Defeasance” has the meaning set forth in Section 8.01(b).

“Legal Holiday” has the meaning set forth in Section 11.07.

“Lenders” has the meaning set forth in the definition of the term “Credit Agreement.”

“Lien” means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest).

“Management Agreement” means the Advisory Services Agreement, dated as of November 30, 2004, by and among the Company, Holdings and Genstar Capital, L.P.

“Maturity Date” means December 1, 2011.

“Moody’s” means Moody’s Investors Service, Inc.

“Mortgages” means the mortgages, deeds of trust, deeds to secure Indebtedness or other similar documents securing Liens on the Premises and/or the Leased Premises, as well as the other Collateral secured by and described in the mortgages, deeds of trust, deeds to secure Indebtedness or other similar documents.

“Net Cash Proceeds” means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the

form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by the Company or any of its Restricted Subsidiaries from such Asset Sale net of:

provided, however, that if, after the payment of all taxes with respect to such Asset Sale, the amount of estimated taxes, if any, pursuant to clause (2) above exceeded the tax amount actually paid in cash in respect of such Asset Sale, the aggregate amount of such excess shall, at such time, constitute Net Cash Proceeds.

“Net Proceeds Offer” has the meaning set forth in Section 4.10.

“Net Proceeds Offer Amount” has the meaning set forth in Section 4.10.

“Net Proceeds Offer Payment Date” has the meaning set forth in Section 4.10.

“Net Proceeds Offer Trigger Date” has the meaning set forth in Section 4.10.

“Non-U.S. Person” means a Person who is not a U.S. person, as defined in Regulation S.

“Notes” means, collectively, the Initial Notes, the Additional Notes and the Exchange Notes.

“Obligations” means all obligations for principal, premium, interest, Additional Interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

“Offering Circular” means the Offering Circular, dated November 22, 2004, relating to the offering of the Initial Notes.

“Officer” means the Chief Executive Officer, the President, the Chief Financial Officer or any Vice President of the Company.

“Officers’ Certificate” means a certificate signed by two Officers of the Company, at least one of whom shall be the principal financial officer of the Company, and delivered to the Trustee.

“144A Global Notes” has the meaning set forth in Section 2.01.

“Opinion of Counsel” means a written opinion of counsel who shall be reasonably acceptable to the Trustee or Collateral Agent, as applicable, complying with the requirements of Sections 11.04 and 11.05, as they relate to the giving of an Opinion of Counsel.

“Paying Agent” has the meaning set forth in Section 2.03.

“Permitted Affiliate Transaction” had the meaning set forth in Section 4.14.

“Permitted Business” means any business that is the same as or similar, reasonably related, complementary or incidental to the business in which the Company and its Restricted Subsidiaries are engaged on the Issue Date.

“Permitted Holders” means Genstar Capital, L.P. and its Affiliates.

“Permitted Indebtedness” means, without duplication, each of the following:

For purposes of determining compliance with Section 4.08, (a) the outstanding principal amount of any item of Indebtedness shall be counted only once and (b) in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (1) through (14) above or is entitled to be incurred pursuant to the Consolidated Fixed Charge Coverage Ratio provisions of Section 4.08, the Company shall, in its sole discretion, classify (or later reclassify) such item of Indebtedness in any manner that complies with Section 4.08.

“Permitted Investments” means:

“Permitted Liens” means the following types of Liens:

“Person” means an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof.

“Physical Notes” has the meaning set forth in Section 2.14(b).

“Preferred Stock” of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation.

“Premises” has the meaning set forth in Section 4.17.

“Private Placement Legend” means the legend set forth on the Initial Notes in the form set forth in Exhibit A.

“Public Equity Offering” means an underwritten public offering of Common Stock of the Company or any holding company of the Company pursuant to a registration statement filed with the SEC (other than on Form S-8).

“Purchase Money Indebtedness” means Indebtedness of the Company and its Restricted Subsidiaries incurred for the purpose of financing all or any part of the purchase price, or the cost of installation, construction or improvement, of property or equipment, provided, that the aggregate principal amount of such Indebtedness does not exceed the lesser of the Fair Market Value of such property or such purchase price or cost.

“QIB” means a “qualified institutional buyer” as defined in Rule 144A.

“Qualified Capital Stock” means any Capital Stock that is not Disqualified Capital Stock.

“Record Date” means any of the Record Dates specified in the Notes, whether or not a Legal Holiday.

“Redemption Date” means, when used with respect to any Note to be redeemed, the date fixed for redemption pursuant to this Indenture and the Notes.

“Redemption Price” means, when used with respect to any Note to be redeemed, the price fixed for redemption pursuant to this Indenture and the Notes.

“Reference Date” has the meaning set forth in Section 4.09.

“Refinance” means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. “Refinanced” and “Refinancing” shall have correlative meanings.

“Refinancing Indebtedness” means any Refinancing by the Company or any Restricted Subsidiary of Indebtedness incurred in accordance with Section 4.08 (other than pursuant to Permitted Indebtedness) or clauses (1), (3) or (11) of the definition of Permitted Indebtedness, in each case that does not:

“Register” is defined in Section 2.03.

“Registrar” has the meaning set forth in Section 2.03.

“Registration Rights Agreement” means the Registration Rights Agreement, dated November 30, 2004, among the Company, the Guarantors and the Initial Purchaser, as the same may be amended or modified from time to time in accordance with the terms thereof.

“Regulation S” means Regulation S under the Securities Act.

“Regulation S Permanent Global Note” means a permanent Global Note deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the Distribution Compliance Period.

“Regulation S Temporary Global Note” means a temporary Global Note deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Initial Notes or Additional Notes initially sold in reliance on Rule 903 of Regulation S.

“Restricted Payment” has the meaning set forth in Section 4.09.

“Restricted Security” has the meaning assigned to such term in Rule 144(a)(3) under the Securities Act; provided that the Trustee shall be entitled to request and conclusively rely on an Opinion of Counsel with respect to whether any Note constitutes a Restricted Security.

“Restricted Subsidiary” means any Subsidiary of the Company which at the time of determination is not an Unrestricted Subsidiary.

“Rule 144A” means Rule 144A under the Securities Act.

“S&P” means Standard & Poor’s Ratings Group.

“SEC” has the meaning set forth in Section 4.20.

“Secured Parties” has the meaning set forth in the Security Agreement.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Security Agreement” means the Security Agreement, dated as of the Issue Date, made by the Company and the Guarantors in favor of the Collateral Agent, as amended or supplemented from time to time in accordance with its terms.

“Significant Subsidiary” with respect to any Person, means any Restricted Subsidiary of such Person that satisfies the criteria for a “significant subsidiary” set forth in Rule 1-02(w) of Regulation S-X under the Exchange Act.

“Subsidiary” with respect to any Person, means:

“Surviving Entity” has the meaning set forth in Section 5.01(1)(b).

“Syracuse Facility” means the facility of the Company located at 1728 Burnet Avenue, Syracuse, Onondago County, New York.

“TIA” means the Trust Indenture Act of 1939 (15 U.S.C. SS 77aaa-77bbbb) as amended, as in effect on the date of this Indenture.

“Transaction Date” has the meaning set forth in the definition of the term “Consolidated Fixed Charge Coverage Ratio.”

“Trustee” has the meaning set forth in the preamble to this Indenture.

“Trust Officer” means, when used with respect to the Trustee, any officer within the Corporate Trust Office of the Trustee, including any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom

any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.

“Unrestricted Subsidiary” means:

The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if:

Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing provisions.

“U.S. Government Obligations” means direct obligations of, and obligations guaranteed by, the United States of America for the payment of which the full faith and credit of the United States of America is pledged.

“U.S. Legal Tender” means such coin or currency of the United States which, as at the time of payment, shall be immediately available legal tender for the payment of public and private debts.

“Voting Stock” means, with respect to any Person, securities of any class or classes of Capital Stock of such Person entitling the holders thereof (whether at all times or only so long as no senior class of stock has voting power by reason of any contingency) to vote in the election of members of the Board of Directors (or equivalent governing body) of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing (1) the then outstanding aggregate principal amount of such Indebtedness into (2) the sum of the total of the products obtained by multiplying:

“Wholly Owned Subsidiary” means any Guarantor of which all the outstanding Capital Stock (other than directors’ qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to applicable law) are owned by the Company or any other Wholly Owned Subsidiary.

Section 1.02 Incorporation by Reference of TIA.

Whenever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in, and made a part of, this Indenture. The following TIA terms used in this Indenture have the following meanings:

“indenture securities” means the Notes.

“indenture security holder” means a Holder.

“indenture to be qualified” means this Indenture.

“indenture trustee” or “institutional trustee” means the Trustee.

“obligor” on the indenture securities means the Company or any other obligor on the Notes.

All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule and not otherwise defined herein have the meanings assigned to them therein.

Section 1.03 Rules of Construction.

Unless the context otherwise requires in this or any other Indenture Document:

Section 2.01 Form and Dating.

The Initial Notes and the Additional Notes and the Trustee’s certificate of authentication thereon shall be substantially in the form of Exhibit A hereto. The Exchange Notes and the Trustee’s certificate of authentication thereon shall be substantially in the form of Exhibit B hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or the Depository rule or usage. The Company and the Trustee shall approve the form of the Notes and any notation, legend or endorsement on them. Each Note shall be dated the date of its authentication.

The terms and provisions contained in the forms of the Notes annexed hereto as Exhibit A and Exhibit B shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Company, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.

Notes offered and sold in reliance on Rule 144A shall be issued initially in the form of one or more permanent global notes in registered form, substantially in the form set forth in Exhibit A (the “144A Global Notes”), deposited with the Trustee, as custodian for the Depository, duly executed by the Company and authenticated by the Trustee as hereinafter provided and shall bear the legend set forth in Exhibit C.

Notes offered and sold to Institutional Accredited Investors in reliance on Rule 501(a)(1), (2), (3) or (7) under the Securities Act shall be issued initially in the form of one or more permanent global notes in registered form, substantially in the form set forth in Exhibit A (the “IAI Global Notes”), deposited with the Trustee, as custodian for the Depository, duly executed by the Company and authenticated by the Trustee as hereinafter provided and shall bear the legend set forth in Exhibit C.

Notes offered and sold in offshore transactions in reliance on Regulation S shall be issued initially in the form of one or more Regulation S Temporary Global Notes deposited with the Trustee, as custodian for the Depository, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Company and authenticated by the Trustee as hereinafter provided and shall bear the legend set forth in Exhibit C.

Following the termination of the Distribution Compliance Period, beneficial interests in a Regulation S Temporary Global Note will be exchanged for beneficial interests in a Regulation S Permanent Global Note pursuant to the Applicable Procedures. Simultaneously with the authentication of

a Regulation S Permanent Global Note, the Trustee will cancel the related Regulation S Temporary Global Note.

The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream will be applicable to transfers of beneficial interests in the Regulation S Temporary Global Note and the Regulation S Permanent Global Note that are held by participants through Euroclear or Clearsteam.

The aggregate principal amount of any Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depository, as hereinafter provided.

The definitive Notes shall be typed, printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner permitted by the rules of any securities exchange on which the Notes may be listed, all as determined by the Officer executing such Notes, as evidenced by their execution of such Notes.

Section 2.02 Execution and Authentication; Aggregate Principal Amount.

An Officer (who shall have been duly authorized by all requisite corporate actions) shall sign the Notes for the Company by manual or facsimile signature.

If an Officer whose signature is on a Note was an Officer at the time of such execution but no longer holds that office or position at the time the Trustee authenticates the Note, the Note shall nevertheless be valid.

A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture.

The Trustee shall authenticate (i) Initial Notes for original issue in the aggregate principal amount not to exceed $165,000,000, (ii) Exchange Notes from time to time for issue only in exchange for a like principal amount of Initial Notes or Additional Notes, and (iii) subject to compliance with Section 4.08, one or more series of Additional Notes in an unlimited amount in each case upon written orders of the Company in the form of an Officers’ Certificate, which Officers’ Certificate shall, in the case of any issuance of Additional Notes, certify that such issuance is in compliance with Section 4.08. In addition, each Officers’ Certificate shall specify the amount of Notes to be authenticated and the date on which the Notes are to be authenticated, whether the Notes are to be Initial Notes, Exchange Notes or Additional Notes. All Notes issued under this Indenture shall vote and consent together on all matters as one class and no series of Notes shall have the right to vote or consent as a separate class on any matter.

The Trustee may appoint an authenticating agent (the “Authenticating Agent”) reasonably acceptable to the Company to authenticate Notes. Unless otherwise provided in the appointment, an Authenticating Agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such Authenticating Agent. An Authenticating Agent has the same rights as an Agent to deal with the Company and Affiliates of the Company.

The Notes shall be issuable in fully registered form only, without coupons, in denominations of $1,000 in principal amount and any integral multiple thereof.

Section 2.03 Registrar and Paying Agent.

The Company initially appoints the Trustee as registrar (the “Registrar”), paying agent (the “Paying Agent”) and agent for service of demand and notices in connection with the Notes. In addition, the Company shall maintain an office or agency in the Borough of Manhattan, The City of New York, where (a) Notes may be presented or surrendered for registration of transfer or for exchange, (b) Notes may be presented or surrendered for payment and (c) notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. Such office shall initially be at The Bank of New York, 101 Barclay Street, Floor 8W, New York, New York 10286, Attention: Corporate Trust Administration. The Registrar shall keep a register of the Notes and of their transfer and exchange (the “Register”). The Company, upon prior written notice to the Trustee, may have one or more co-Registrars and one or more additional Paying Agents reasonably acceptable to the Trustee. The term “Paying Agent” includes any additional Paying Agent. Neither the Company nor any Affiliate of the Company may act as Paying Agent.

The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, which agreement shall incorporate the provisions of the TIA and implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee in writing, in advance, of the name and address of any such Agent and otherwise be reasonably satisfactory to the Trustee. If the Company fails to maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as such.

Any Paying Agent or Registrar may resign upon thirty (30) days’ written notice to the Company.

Section 2.04 Obligations of Paying Agent.

The Company shall require each Paying Agent other than the Trustee to agree in writing that such Paying Agent shall hold separate and apart from, and not commingle with any other properties, for the benefit of the Holders or the Trustee, all assets held by the Paying Agent for the payment of principal of, or interest and Additional Interest, if any, on, the Notes (whether such assets have been distributed to it by the Company or any other obligor on the Notes), and the Company and the Paying Agent shall notify the Trustee in writing of any Default by the Company (or any other obligor on the Notes) in making any such payment. The Company at any time may require a Paying Agent to distribute all assets held by it to the Trustee and account for any assets disbursed and the Trustee may at any time during the continuance of any payment Default, upon written request to a Paying Agent, require such Paying Agent to distribute all assets held by it to the Trustee and to account for any assets distributed. Upon receipt by the Trustee of all assets that shall have been delivered by the Company to the Paying Agent, the Paying Agent shall have no further liability for such assets.

Section 2.05 Holder Lists.

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Company shall furnish or cause the Registrar to furnish to the Trustee before each Record Date and at such other times as the Trustee may request in writing a list as of such date and in such form as the Trustee may reasonably request of the names and addresses of the Holders, which list may be conclusively relied upon by the Trustee.

Section 2.06 Transfer and Exchange.

Subject to the provisions of Sections 2.14 and 2.15, when Notes are presented to the Registrar or a co-Registrar with a request to register the transfer of such Notes or to exchange such Notes for an equal principal amount of Notes of other authorized denominations, the Registrar or co-Registrar shall register the transfer or make the exchange as requested; provided, however, that the Notes presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar or co-Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing and such other documents as the Registrar or co-Registrar may reasonably require. To permit registrations of transfers and exchanges, the Company shall issue and the Trustee shall authenticate Notes at the Registrar’s or co-Registrar’s request. No service charge shall be made for any registration of transfer or exchange, but the Company or the Trustee may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchanges or transfers pursuant to Section 2.10, 3.06 or 4.10, in which event the Company shall be responsible for the payment of such taxes).

The Registrar or co-Registrar shall not be required to register the transfer or exchange of any Note (i) during a period beginning at the opening of business fifteen (15) days before the mailing of a notice of redemption of Notes and ending at the close of business on the day of such mailing and (ii) selected for redemption in whole or in part pursuant to Article Three, except the unredeemed portion of any Note being redeemed in part.

Any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of beneficial interests in such Global Note may be effected only through the Depository, in accordance with this Indenture and the Applicable Procedures.

Section 2.07 Replacement Notes.

If a mutilated Note is surrendered to the Trustee or if the Holder of a Note claims in writing that the Note has been lost, destroyed or wrongfully taken, then, in the absence of written notice to the Company or the Trustee that such Note has been acquired by a protected purchaser, the Company shall issue and the Trustee shall authenticate a replacement Note of like tenor and principal amount and bearing a number not contemporaneously outstanding if the Trustee’s requirements are met. Except with respect to mutilated Notes, such Holder must provide an affidavit of lost certificate and an indemnity bond, sufficient in the judgment of both the Company and the Trustee, to protect the Company, the Trustee or any Agent from any loss which any of them may suffer if a Note is replaced. The Company may charge such Holder for its reasonable out-of-pocket expenses in replacing a Note, including reasonable fees and expenses of its counsel and of the Trustee and its counsel. In case any mutilated, lost, destroyed or wrongfully taken Note has become or is about to become due and payable, the Company in its discretion may pay such Note instead of issuing a new Note in replacement thereof. Every replacement Note shall constitute an additional obligation of the Company, entitled to the benefits of this Indenture.

Section 2.08 Outstanding Notes.

Notes outstanding at any time are all the Notes that have been authenticated by the Trustee except those cancelled by it, those delivered to it for cancellation and those described in this Section 2.08 as not outstanding. Subject to the provisions of Section 2.09, a Note does not cease to be outstanding because the Company or any of its Affiliates holds the Note.

If a Note is replaced pursuant to Section 2.07 (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless each of the Company and the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note and replacement thereof pursuant to Section 2.07.

If on a Redemption Date or the Maturity Date the Paying Agent holds U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the principal and interest, and Additional Interest, if any, due on the Notes payable on that date and is not prohibited from paying such money to the Holders thereof pursuant to the terms of this Indenture, then on and after that date such Notes cease to be outstanding and interest, and Additional Interest, if applicable, on them ceases to accrue.

Section 2.09 Treasury Notes; When Notes are Disregarded.

In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company or any of its Affiliates shall be considered as though they are not outstanding; provided, that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which the Trustee actually knows are so owned shall be so considered. Notes so owned which have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Notes and that the pledgee is not the Company or any other obligor upon the Notes or any Affiliate of the Company or of such other obligor. The Company shall notify the Trustee, in writing (which notice shall constitute actual notice for purposes of the foregoing sentence), when it or any of its Affiliates repurchases or otherwise acquires Notes, of the aggregate principal amount of such Notes so repurchased or otherwise acquired.

Section 2.10 Temporary Notes.

Until definitive Notes are ready for delivery, the Company may prepare and execute and the Trustee shall authenticate temporary Notes upon receipt of a written order of the Company in the form of an Officers’ Certificate. The Officers’ Certificate shall specify the amount of temporary Notes to be authenticated and the date on which the temporary Notes are to be authenticated. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate upon receipt of a written order of the Company pursuant to Section 2.02 definitive Notes in exchange for temporary Notes. Until so exchanged, the temporary Notes shall be entitled to the same benefits under this Indenture as definitive Notes.

Section 2.11 Cancellation.

The Company at any time may deliver Notes previously authenticated hereunder which the Company has acquired in any lawful manner, to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for transfer, exchange or payment. The Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent, and no one else, shall cancel all Notes surrendered for transfer, exchange, payment or cancellation. Subject to Section 2.07, the Company may not issue new Notes to replace Notes that it has paid or delivered to the Trustee for cancellation. If the Company shall acquire any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Notes unless and until the same are surrendered to the Trustee for cancellation pursuant to this Section 2.11. The Trustee shall dispose of all cancelled Notes in accordance with customary procedures or, at the written request of the Company, shall return the same to the Company.

Section 2.12 CUSIP Numbers.

A “CUSIP” number shall be printed on the Notes, and the Trustee shall use the CUSIP number in notices of redemption, purchase or exchange as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Notes and that reliance may be placed only on the other identification numbers printed on the Notes. The Company shall promptly notify the Trustee of any change in the CUSIP number.

Section 2.13 Deposit of Moneys.

Prior to 11:00 a.m. New York City time on each Interest Payment Date and the Maturity Date, the Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to make cash payments, if any, due on such Interest Payment Date or the Maturity Date, as the case may be.

Section 2.14 Book-Entry Provisions for Global Notes.

Members of, or participants in, the Depository (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depository, or the Trustee as its custodian, or under any Global Note, and the Depository may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of the Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note.

Section 2.15 Special Transfer Provisions.

whereupon (1) the Registrar shall reflect on its books and records the date and (if the transfer does not involve a transfer of outstanding Physical Notes) a decrease in the principal amount of the Global Note in an amount equal to the principal amount of the beneficial interest in the Global Note to be transferred, and (2) the Company shall execute and the Trustee shall authenticate and deliver one or more Physical Notes of like tenor and principal amount.

The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.14 or this Section 2.15. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar.

Section 2.16 Transfers of Global Notes and Physical Notes.

A transfer of a Global Note or a Physical Note (including the right to receive principal and interest, and Additional Interest, if any, payable thereon) may be made only by the Registrar’s entering the transfer in the Register. Prior to such entry, the Company shall treat the person in whose name such Note is registered as the owner of the Note for all purposes.

Each Holder of a Note agrees to indemnify the Company and the Trustee against any liability that may result from the transfer, exchange or assignment of such Holder’s Note in violation of any provision of this Indenture and/or applicable United States Federal or state securities law.

The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depositary participants or beneficial owners of interests in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

Section 3.01 Optional Redemption.

The Company may, at its option, redeem the Notes, in whole or in part, at specified times and under specified conditions, as set forth in Paragraph 5 of the Notes. If the Company elects to redeem Notes pursuant to Paragraph 5 of the Notes, it shall, at least forty-five (45) days (or such shorter period as the Trustee may agree) before the Redemption Date, notify to the Trustee and Paying Agent in writing of the Redemption Date and the principal amount of the Notes to be redeemed and the clause of this Indenture or the Notes pursuant to which the redemption shall occur.

Each Officers’ Certificate provided for in this Section 3.01 shall be accompanied by an Opinion of Counsel stating that such redemption has complied with the conditions contained herein and in the Notes.

Section 3.02 Selection of Notes to be Redeemed.

In the event that fewer than all of the Notes are to be redeemed pursuant to Paragraph 5 of the Notes, the Trustee shall select the Notes to be redeemed:

The Trustee shall make the selection from the Notes outstanding and not previously called for redemption and shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount at maturity thereof, to be redeemed. Notes in denominations of $1,000 in principal amount at maturity may be redeemed only in whole. The Trustee may select for redemption portions (equal to $1,000 in principal amount at maturity or any integral multiple thereof) of the principal of Notes that have denominations larger than $1,000. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.

Section 3.03 Notice of Redemption.

At least thirty (30) days but not more than sixty (60) days before a Redemption Date, the Company shall mail or cause to be mailed a notice of redemption by first class mail, postage prepaid, to each Holder whose Notes are to be redeemed at its registered address, with a copy to the Trustee and any Paying Agent. At the Company’s written request, the Trustee shall give the notice of redemption in the Company’s name and at the Company’s expense. Failure to give notice of redemption, or any defect therein to any Holder of any Note selected for redemption shall not impair or affect the validity of the redemption of any other Note.

Each notice of redemption shall identify the Notes to be redeemed and shall state:

If any of the Notes to be redeemed is in the form of a Global Note, then the Company shall modify such notice to the extent necessary to accord with the procedures of the Depository applicable to redemption.

Section 3.04 Effect of Notice of Redemption.

Once notice of redemption is mailed in accordance with Section 3.03, Notes or portions thereof called for redemption shall become irrevocably due and payable on the Redemption Date and at the Redemption Price plus accrued interest and Additional Interest, if any, to (but not including) the Redemption Date. Upon surrender to the Trustee or Paying Agent, such Notes or portions thereof called for redemption shall be paid at the Redemption Price plus accrued interest and Additional Interest, if any, thereon to (but not including) the Redemption Date, but installments of interest, the maturity of which is on or prior to the Redemption Date, shall be payable to Holders of record at the close of business on the relevant Record Dates referred to in the Notes.

Section 3.05 Deposit of Redemption Price.

Not later than 10:00 a.m. local time in the place of payment on the Redemption Date, the Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price plus accrued and unpaid interest and Additional Interest, if any, to (but not including) the Redemption Date, of all Notes or portions thereof to be redeemed on that date.

The Paying Agent shall promptly return to the Company any U.S. Legal Tender so deposited which is not required for that purpose, except with respect to monies owed as obligations to the Trustee pursuant to Article Seven.

If the Company complies with the preceding paragraph, then, unless the Company defaults in the payment of such Redemption Price plus accrued interest and Additional Interest, if any, to (but not including) the Redemption Date, on the Notes or portions thereof to be redeemed shall cease to accrue on and after the applicable Redemption Date, whether or not such Notes are presented for payment.

Section 3.06 Notes Redeemed in Part.

Upon surrender of a Note that is to be redeemed in part, the Company shall issue and the Trustee shall authenticate for the Holder at the expense of the Company a new Note or Notes equal in principal amount to the unredeemed portion of the Note surrendered.

Section 4.01 Payment of Notes.

The Company shall pay the principal of, or premium, if any, or interest, and Additional Interest, if any, on the Notes on the dates and in the manner provided in the Notes and in this Indenture. An installment of principal of, or premium, if any, or interest, and Additional Interest, if any, on the Notes

shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Company or an Affiliate of the Company) holds by 11:00 a.m. on that date U.S. Legal Tender designated for and sufficient to pay the installment in full.

Notwithstanding anything to the contrary contained in this Indenture, the Company may, to the extent it is required to do so by law, deduct or withhold income or other similar taxes imposed by the United States from principal or interest payments hereunder.

Section 4.02 Maintenance of Office or Agency.

The Company shall maintain the office or agency required under Section 2.03. The Company shall give prior written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of The Bank of New York Trust Company, N.A. and the Company hereby appoints The Bank of New York Trust Company, N.A. as its agent to receive all such presentations, surrenders, notices and demands.

Section 4.03 Corporate Existence.

Except as otherwise permitted by Article Four, Article Five and Article Ten, the Company shall do or cause to be done, at its own cost and expense, all things necessary to preserve and keep in full force and effect its corporate existence and the limited liability company, partnership or corporate existence of each of the Restricted Subsidiaries in accordance with the respective organizational documents of each such Restricted Subsidiary and the material rights (charter and statutory) and franchises of the Company and each such Restricted Subsidiary; provided, however, that the Company shall not be required to preserve, with respect to itself, any material right or franchise and, with respect to any of the Restricted Subsidiaries, any such existence, material right or franchise, if the Board of Directors of the Company, shall determine in good faith that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole.

Section 4.04 Payment of Taxes and Other Claims.

The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all material taxes, assessments and governmental charges (including withholding taxes and any penalties, interest and additions to taxes) levied or imposed upon it or any of the Restricted Subsidiaries or its properties or any of the Restricted Subsidiaries’ properties and (ii) all material lawful claims for labor, materials and supplies that, if unpaid, might by law become a Lien upon its properties or any of its Restricted Subsidiaries’ properties; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being or shall be contested in good faith by appropriate proceedings properly instituted and diligently conducted for which adequate reserves, to the extent required under GAAP, have been taken.

Section 4.05 Maintenance of Properties and Insurance; Compliance with Laws.

(b) The Company shall maintain insurance (including appropriate self-insurance) against loss or damage of the kinds that, in the good faith judgment of the Company, is adequate and appropriate for the conduct of the business of the Company and the Restricted Subsidiaries in a prudent manner, with reputable insurers or with the government of the United States or an agency or instrumentality thereof, in such amounts, with such deductibles, and by such methods as shall be customary, in the good faith judgment of the Company, for companies similarly situated in the industry in which the Company and the Restricted Subsidiaries are engaged.

(c) The Company shall, and shall cause each of its Subsidiaries to, comply with all applicable statutes, rules, regulations, orders and restrictions of the United States, all states and municipalities thereof, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing, in respect of the conduct of its businesses and the ownership of its properties, except for such noncompliances as are not in the aggregate reasonably likely to have a material adverse effect on the financial condition or results of operations of the Company and its Subsidiaries, taken as a whole, or the ability of the Company to perform its obligations hereunder.

Section 4.06 Compliance Certificate; Notice of Default.

(a) The Company shall deliver to the Trustee, within ninety (90) days after the end of the Company’s fiscal year, an Officers’ Certificate stating that a review of the activities of the Company and its Restricted Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers (one of whom is the principal executive officer, principal financial officer or principal accounting officer) with a view to determining whether they have kept, observed, performed and fulfilled their obligations under this Indenture and the other Indenture Documents and further stating, as to each such Officer signing such certificate, that to the best of such Officer’s actual knowledge the Company and its Restricted Subsidiaries during such preceding fiscal year have kept, observed, performed and fulfilled each and every condition and covenant under this Indenture and the other Indenture Documents in all material respects and at the date of such certificate there is no Default or Event of Default that has occurred and is continuing or, if such signers do know of such Default or Event of Default, the certificate shall describe the Default or Event of Default and its status with particularity.

(b) The Company shall, so long as any Notes are outstanding, upon any Officer of the Company becoming aware of any Default or Event of Default, deliver to the Trustee an Officers’ Certificate specifying such Default or Event of Default within five (5) Business Days of such Officer becoming aware of such occurrence.

Section 4.07 Waiver of Stay, Extension or Usury Laws.

The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company from paying all or any portion of the principal of, premium, if any, or interest or Additional Interest, if any, on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) the Company hereby expressly waives all benefit or advantage of any such law, and covenant that it shall not,

by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee or Collateral Agent, but shall suffer and permit the execution of every such power as though no such law had been enacted.

Section 4.08 Limitation on Incurrence of Additional Indebtedness.

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, “incur”) any Indebtedness (other than Permitted Indebtedness). Notwithstanding the foregoing the Company and the Guarantors may incur Indebtedness (including Acquired Indebtedness) if on the date of (after giving effect to) the incurrence of such Indebtedness: (i) no Default or Event of Default shall have occurred and be continuing; and (ii) the Consolidated Fixed Charge Coverage Ratio of the Company will be at least 2.0 to 1.0.

Section 4.09 Limitation on Restricted Payments.

The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly:

(each of the foregoing actions set forth in clauses (1), (2), (3) and (4) being referred to as a “Restricted Payment”), if at the time of such Restricted Payment or immediately after giving effect thereto:

on the last day of the Company’s most recent fiscal quarter ending prior to the date of such Restricted Payment for which financial statements are available (the “Reference Date”) (treating such period as a single accounting period); plus

(E) (1) the Company’s portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of any Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary in an amount not to exceed the amount of Investments (excluding Permitted Investments) previously made (and treated as a Restricted Payment) by the Company of any or its Restricted Subsidiaries in such Unrestricted Subsidiary and (2) the aggregate amount of cash dividends or cash distributions received by the Company or the Guarantors from an Unrestricted Subsidiary from the Issue Date to the Reference Date.

Notwithstanding the foregoing, the provisions set forth in the immediately preceding paragraph do not prohibit:

In determining the aggregate amount of Restricted Payments made subsequent to the Issue Date in accordance with clause (iii) of the first paragraph of this Section 4.09 amounts expended pursuant to clauses (1), (4)(ii) and (9) shall be included in such calculation and amounts expended pursuant to clauses (2), (3), 4(i), (5), (6), (7), (8), (10) and (11) shall not be included in such calculation.

Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment complies with the Indenture and setting forth in reasonable detail the basis upon which the required calculations were computed, which calculations may be based upon the Company’s latest available internal quarterly financial statements.

Section 4.10 Limitation on Asset Sales.

The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

Pending the final application of Net Cash Proceeds, the Company may temporarily reduce revolving credit borrowings or invest such Net Cash Proceeds in Cash Equivalents. On the 361st day after an Asset Sale or such earlier date, if any, as the Board of Directors of the Company or of such Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses (3)(a), 3(b) or 3(c) of the preceding paragraph (each, a “Net Proceeds Offer Trigger Date”), such aggregate amount of Net Cash Proceeds which have not been applied (each a “Net Proceeds Offer Amount”) shall be applied by the Company or such Restricted Subsidiary to make an offer to purchase (the “Net Proceeds Offer”) on a date (the “Net Proceeds Offer Payment Date”) not less than thirty (30) nor more than forty-five (45) days following the applicable Net Proceeds Offer Trigger Date, from all Holders of the Notes the maximum principal amount of Notes that may be purchased with the Net Proceeds Offer Amount at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of purchase.

In the event of the transfer of substantially all (but not all) of the property and assets of the Company and its Restricted Subsidiaries as an entirety to a Person in a transaction permitted under Section 5.01 that does not constitute a Change of Control, the successor entity shall be deemed to have sold the properties and assets of the Company and its Restricted Subsidiaries not so transferred for purposes of this Section 4.10, and shall comply with this Section 4.10 with respect to such deemed sale as if it constituted an Asset Sale. The Fair Market Value of such properties and assets of the Company or its Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for purposes of this Section 4.10.

Each notice of a Net Proceeds Offer shall be mailed first class, postage prepaid, to the record Holders as shown on the register of Holders within twenty (20) days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee. Upon receiving notice of the Net Proceeds Offer, Holders may elect to tender their Notes in whole or in part in integral multiples of $1,000 in exchange for cash. To the extent Holders properly tender Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of tendering Holders will be purchased on a pro rata basis (based on amounts tendered). A Net Proceeds Offer shall remain open for a period of 20 Business Days or such longer period as may be required by law.

with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.10 by virtue of such compliance.

Section 4.11 Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.

The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to:

except for such encumbrances or restrictions existing:

Section 4.12 Limitation on Issuances and Sales of Capital Stock of Subsidiaries.

The Company will not, and will not permit or cause any of its Restricted Subsidiaries to, transfer, convey, issue or sell any Capital Stock of any Restricted Subsidiary to any Person (other than to the Company or to a Wholly Owned Subsidiary and directors’ qualifying shares); provided, that this provision shall not prohibit:

Section 4.13 Limitation on Liens.

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist any Liens (other than Permitted Liens) of any kind against or upon any property or assets of the Company or any of its Restricted Subsidiaries whether owned on the Issue Date or acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise convey any right to receive income or profits therefrom.

Section 4.14 Limitations on Transactions with Affiliates.

(x) Permitted Affiliate Transactions, and

(y) Affiliate Transactions on terms that are no less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm’s length basis from a Person that is not an Affiliate of the Company or such Restricted Subsidiary.

With respect to all Affiliate Transactions (other than Permitted Affiliated Transactions):

Section 4.15 Additional Subsidiary Guarantees.

If the Company or any of its Restricted Subsidiaries acquires or creates another Domestic Restricted Subsidiary after the Issue Date (other than an Unrestricted Subsidiary), then the Company shall cause such Domestic Restricted Subsidiary to:

Thereafter, such Subsidiary shall be a Guarantor for all purposes of the Indenture.

Section 4.16 Impairment of Security Interest.

Neither the Company nor any of its Restricted Subsidiaries will (a) take or omit to take any action which would adversely affect or impair in any material respect the Liens (other than the incurrence of Permitted Liens) in favor of the Collateral Agent with respect to the Collateral, (b) grant to any Person (other than the Collateral Agent), or permit any Person (other than the Collateral Agent), to retain any interest whatsoever in the Collateral other than Permitted Liens or (c) enter into any agreement that requires the proceeds received from any sale of Collateral to be applied to repay, redeem, defease or otherwise acquire or retire any Indebtedness of any Person, other than as permitted by the Indenture, the Notes and the Collateral Agreements. The Company shall, and shall cause each Guarantor to, at their sole cost and expense, (i) execute and deliver all such agreements and instruments as necessary or as the Collateral Agent shall reasonably request to more fully or accurately describe the property intended to be Collateral or the obligations intended to be secured by the Collateral Agreements and (ii) file any such notice filings or other agreements or instruments as may be reasonably necessary or desirable under

applicable law to perfect the Liens created by the Collateral Agreements at such appropriate times and at such appropriate places or as the Collateral Agent may reasonably request.

Section 4.17 Real Estate Mortgages and Filings.

(a) With respect to any fee interest in any real property (individually and collectively, the “Premises”) (x) owned by the Company or a Domestic Restricted Subsidiary on the Issue Date (other than the Syracuse Facility) or (y) acquired by the Company or a Domestic Restricted Subsidiary after the Issue Date (other than real property located in the State of New York), (i) with a purchase price, or with a Fair Market Value as of the Issue Date, as applicable, greater than $500,000, and (ii) within 60 days of the Issue Date in the case of clause (x) or within ninety (90) days of the acquisition thereof in the case of clause (y), the Company shall deliver to the Collateral Agent:

(b) In the event that the Company or the Guarantors, as applicable, execute Mortgages of the Syracuse Facility or any other existing and future owned real property in the State of New York under the Credit Agreement in the future, the Company or such Guarantor shall simultaneously execute Mortgages of such real property in favor of the Collateral Agent for the benefit of the Holders of the Notes.

Section 4.18 Leasehold Mortgages and Filings; Landlord Waivers.

Section 4.19 Conduct of Business.

The Company will not, and will not permit any of its Restricted Subsidiaries to, engage in any businesses other than Permitted Businesses.

Section 4.20 Reports to Holders.

Whether or not required by the rules and regulations of the Securities and Exchange Commission (the “SEC”), so long as any Notes are outstanding, the Company will furnish to the Trustee and, upon request, to the Holders:

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information

contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

Notwithstanding this Section 4.20, the Company may satisfy such requirements prior to the effectiveness of the registration statement contemplated by the Registration Rights Agreement by filing with the SEC such registration statement, to the extent that any such registration statement contains substantially the same information as would be required to be filed by the Company if it were subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, and by providing the Trustee and Holders with such Registration Statement (and any amendments thereto) promptly following the filing thereof.

In addition, following the consummation of the Exchange Offer, whether or not required by the rules and regulations of the SEC, the Company will file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC’s rules and regulations (unless the SEC will not accept such a filing). In addition, the Company has agreed that, prior to the consummation of the Exchange Offer, for so long as any Notes remain outstanding, it will furnish to the Holders upon their request, the information required to be delivered pursuant to Rule 144(A)(d)(4) under the Securities Act.

Section 4.21 Payments for Consent.

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture, the Notes, any Collateral Agreement or the Intercreditor Agreement unless such consideration is offered to be paid or is paid to all Holders that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Section 4.22 Repurchase Upon Change of Control.

(a) Upon the occurrence of a Change of Control, the Company shall make an offer to purchase all outstanding Notes pursuant to the requirements described in clause (b) below (the “Change of Control Offer”) at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase.

(b) Within thirty (30) days following the date upon which the Change of Control occurred, the Company shall send, by registered first class mail, postage prepaid, a notice to each record Holder as shown on the register of Holders, with a copy to the Trustee, which notice shall govern the terms of the Change of Control Offer. The notice to the Holders shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Change of Control Offer. Such notice shall state:

(1) that the Change of Control Offer is being made pursuant to this Section 4.22 and that, to the extent lawful, all Notes tendered and not withdrawn shall be accepted for payment;

(2) the purchase price (including the amount of accrued interest, if any) and the purchase date (which shall be no earlier than thirty (30) days nor later than sixty (60) days from the date such notice is mailed, other than as may be required by law) (the “Change of Control Payment Date”);

(3) that any Note not tendered shall continue to accrue interest and Additional Interest, if applicable;

(4) that, unless the Company defaults in making payment therefor, any Note accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest, and Additional Interest, if applicable, after the Change of Control Payment Date;

(5) that Holders electing to have a Note purchased pursuant to a Change of Control Offer shall be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day prior to the Change of Control Payment Date;

(6) that Holders shall be entitled to withdraw their election if the Paying Agent receives, not later than five (5) Business Days prior to the Change of Control Payment Date, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes the Holder delivered for purchase and a statement that such Holder is withdrawing its election to have such Notes purchased;

(7) that Holders whose Notes are purchased only in part shall be issued new Notes in a principal amount equal to the unpurchased portion of the Notes surrendered; provided that each Note purchased and each new Note issued shall be in an original principal amount of $1,000 or integral multiples thereof; and

(8) the circumstances and relevant facts regarding such Change of Control.

If any of the Notes subject to the Change of Control Offer is in the form of a Global Note, then the Company shall modify such notice to the extent necessary to comply with the procedures of the Depositary applicable to repurchases.

On or before the Change of Control Payment Date, the Company shall, to the extent lawful (i) accept for payment Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender sufficient to pay the purchase price plus accrued interest and Additional Interest, if any, of all Notes or portions thereof so tendered and (iii) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to the Holders of Notes so tendered the purchase price for such Notes and the Company shall promptly issue and the Trustee shall promptly (but in any case not later than five days after the Change of Control Payment Date) authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered; provided that each such new Note shall be in a principal amount of $1,000 or an integral multiple thereof. Any Notes not so accepted shall be promptly mailed by the Company to the Holders thereof. For purposes of this Section 4.22, the Trustee shall act as the Paying Agent.

Any amounts remaining after the purchase of Notes pursuant to a Change of Control Offer shall be returned by the Trustee to the Company.

Neither the Board of Directors of the Company nor the Trustee may waive the Company’s obligation to offer to purchase the Notes pursuant to this Section 4.22.

The Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements of this Section 4.22 and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent the provisions of any securities laws or regulations conflict with the provisions under this Section 4.22, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations under this Section 4.22 by virtue thereof.

Section 4.23 Additional Interest.

If Additional Interest becomes payable by the Company pursuant to the Registration Rights Agreement, the Company shall deliver to the Trustee an Officers’ Certificate stating (i) the amount of Additional Interest due and payable, (ii) the Section of the Registration Rights Agreement pursuant to which Additional Interest is due and payable and (iii) the date on which Additional Interest is payable. Unless and until a Responsible Officer of the Trustee receives such an Officers’ Certificate, the Trustee may assume without inquiry that no Additional Interest is payable; provided, that the failure of the Company to deliver to the Trustee such Officers’ Certificate shall not relieve the Company of its obligation to pay any such Additional Interest when due and payable.

Section 5.01 Merger, Consolidation and Sale of Assets.

The Company will not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company’s assets (determined on a consolidated basis for the Company and its Restricted Subsidiaries) whether as an entirety or substantially as an entirety to any Person unless:

(a) the Company shall be the surviving or continuing corporation; or

(b) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company and of the Company’s Restricted Subsidiaries substantially as an entirety (the “Surviving Entity”):

(x) shall be an entity organized and validly existing under the laws of the United States or any State thereof or the District of Columbia; and

any, interest and Additional Interest, if any, on all of the Notes and the performance of every covenant of the Notes, the Indenture and the Registration Rights Agreement on the part of the Company to be performed or observed thereunder and (ii) by amendment, supplement or other instrument (in form and substance reasonably satisfactory to the Trustee and the Collateral Agent), executed and delivered to the Trustee, all obligations of the Company under the Collateral Agreements, and in connection therewith shall cause such instruments to be filed and recorded in such jurisdictions and take such other actions as may be required by applicable law to perfect or continue the perfection of the Lien created under the Collateral Agreements on the Collateral owned by or transferred to the surviving entity;

Section 5.02 Successor Entity Substituted.

Upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of the Company in accordance with Section 5.01, in which the Company is not surviving or the continuing corporation, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture and the Notes with the same effect as if such surviving entity had been named as such. Upon such substitution, the Company and any Guarantors that remain Subsidiaries of the Company shall be released from their obligations under this Indenture and the Guarantees.

Section 6.01 Events of Default.

The following events are defined as “Events of Default”:

Section 6.02 Acceleration.

Section 6.03 Other Remedies.

If an Event of Default occurs and is continuing, each of the Trustee and the Collateral Agent may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of, premium, if any, or interest, or Additional Interest, if any, on the Notes or to enforce the performance of any provision of the Notes, this Indenture or any Collateral Agreement.

Each of the Trustee and the Collateral Agent may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee, the Collateral Agent or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law.

Section 6.04 Waiver of Past Defaults.

Subject to Sections 2.09, 6.07 and 9.02, the Holders of a majority in principal amount of the Notes may waive any existing Default or Event of Default and its consequences, except (other than as provided in Section 6.02(c)) a default in the payment of the principal of or premium, if any, interest or Additional Interest, if any, on any Notes. When a Default or Event of Default is waived, it is cured and ceases to exist.

Section 6.05 Control by Majority.

Subject to Section 2.09, the Holders of a majority in principal amount of the outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or the Collateral Agent, as the case may be, or exercising any trust or power conferred on the Trustee or the Collateral Agent, as the case may be, including, without limitation, any remedies provided for in Section 6.03. Subject to Section 7.01 and 7.02(f), however, the Trustee or the Collateral Agent, as the case may be, may refuse to follow any direction (which direction, if sent to the Trustee or the Collateral Agent, as the case may be, shall be in writing) that the Trustee or the Collateral Agent, as the case may be, reasonably believes conflicts with any applicable law or this Indenture, that the Trustee or the Collateral Agent, as the case may be, determines may be unduly prejudicial to the rights of another Holder, or that may subject the Trustee or the Collateral Agent, as the case may be, to personal liability; provided that the Trustee or the Collateral Agent, as the case may be, may take any other action deemed proper by the Trustee or the Collateral Agent, as the case may be, which is not inconsistent with such direction (which direction, if sent to the Trustee or the Collateral Agent, as the case may be, shall be in writing).

Section 6.06 Limitation on Suits.

A Holder may not pursue any remedy with respect to this Indenture or the Notes unless:

A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over such other Holder.

Section 6.07 Rights of Holders to Receive Payment.

Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of, premium, if any, and interest on a Note, on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

Section 6.08 Collection Suit by Trustee or Collateral Agent.

If an Event of Default specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee or the Collateral Agent may recover judgment (i) in its own name and (ii)(x) in the case of the Trustee, as trustee of an express trust or (y) in the case of the Collateral Agent, as collateral agent on behalf of each of the Secured Parties, in each case against the Company or any other obligor on the Notes for the whole amount of principal of, premium, if any, and accrued interest, and Additional Interest, if any, remaining unpaid on, the Notes, together with interest on overdue principal and, to the extent that payment of such interest is lawful, interest on overdue installments of interest at the rate set forth in Section 4.01 and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, the Collateral Agent and their respective agents and counsel and any other amounts due the Trustee under the Collateral Agreements and Section 7.07.

Section 6.09 Trustee May File Proofs of Claim.

The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relating to the Company or any other obligor upon the Notes, any of their respective creditors or any of their respective property and shall be entitled and empowered to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and any Custodian in any such judicial proceedings is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, taxes, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under the Collateral Agreements and Section 7.07. The Company’s payment obligations under this Section 6.09 shall be secured in accordance with the provisions of Section 7.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to

authorize the Trustee or the Collateral Agent, as the case may be, to vote in respect of the claim of any Holder in any such proceeding.

Section 6.10 Priorities.

If the Trustee collects any money or property pursuant to this Article Six, it shall pay out the money in the following order:

First: to the Trustee, the Collateral Agent, the Paying Agent and the Registrar for amounts due under Section 7.07 (including payment of all compensation expense, all liabilities incurred and all advances made by the Trustee or the Collateral Agent, as the case may be, and the costs and expenses of collection);

Second: if the Holders are forced to proceed against the Company directly without the Trustee or the Collateral Agent, to Holders for their collection costs;

Third: to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and

Fourth: to the Company or any other obligor on the Notes, as their interests may appear, or as a court of competent jurisdiction may direct.

The Trustee, upon prior written notice to the Company, may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10.

Section 6.11 Undertaking for Costs.

All parties to this Indenture agree, and each Holder by its acceptance of its Note shall be deemed to have agreed, that in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee or the Collateral Agent, as the case may be, for any action taken or omitted by it as Trustee or the Collateral Agent, as the case may be, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee or the Collateral Agent, as the case may be, a suit by a Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in principal amount of the outstanding Notes.

Section 6.12 Restoration of Rights and Remedies.

If the Trustee, the Collateral Agent or any Holder has instituted any proceedings to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee, the Collateral Agent, or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee, the Collateral Agent and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee, the Collateral Agent and the Holders shall continue as though no such proceeding has been instituted.

The duties and responsibilities of the Trustee shall be as provided by the TIA and as set forth herein.

Subject to Section 7.01:

The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company, any Subsidiary of the Company or its respective Affiliates with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11 of this Indenture, and the Trustee is subject to TIA Sections 310(b) and 311.

The Trustee makes no representation as to the validity, adequacy or sufficiency of this Indenture, the Notes or the Collateral Agreements, and it shall not be accountable for the Company’s use of the proceeds from the Notes, and it shall not be responsible for any statement of the Company in this Indenture, the Notes, the Collateral Agreements or any other documents in connection with the issuance of the Notes other than the Trustee’s certificate of authentication.

Beyond the exercise of reasonable care in the custody thereof and the fulfillment of its obligations under this Indenture, the Intercreditor Agreement and the Collateral Agreements, the Trustee shall have no duty as to any Collateral in its possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto. The Trustee shall be deemed to have exercised reasonable care in the custody of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which it accords its own property. The Trustee shall not be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any security interest in the Collateral.

The Trustee makes no representations as to and shall not be responsible for the existence, genuineness, value, sufficiency or condition of any of the Collateral or as to the security afforded or intended to be afforded thereby, hereby or by any Collateral Agreement, or for the validity, perfection, priority or enforceability of the Liens or security interests in any of the Collateral created or intended to be created by any of the Collateral Agreements, whether impaired by operation of law or by reason of any action or omission to act on its part hereunder, except to the extent such action or omission constitutes gross negligence or willful misconduct on the part of the Trustee, for the validity or sufficiency of the Collateral, any Collateral Agreements or any agreement or assignment contained in any thereof, for the validity of the title of the Company or any Guarantor to the Collateral, for insuring the Collateral or for the payment of taxes, charges, assessments or Liens upon the Collateral or otherwise as to the maintenance of the Collateral.

If a Default or an Event of Default occurs and is continuing and if a Trust Officer has actual knowledge or has received written notice from the Company or any Holder, the Trustee shall mail to each Holder, with a copy to the Company, notice of the Default or Event of Default within ninety (90) days thereof. Except in the case of a Default or an Event of Default in payment of principal of, premium, if any, interest or Additional Interest, if any, on, any Note, including an accelerated payment and the failure to make payment on the Change of Control Payment Date pursuant to a Change of Control Offer and, except in the case of a failure to comply with Article Five, the Trustee may withhold the notice if and so long as its Board of Directors, the executive committee of its Board of Directors or a committee of its directors and/or Trust Officers in good faith determines that withholding the notice is in the interest of the Holders.

Within sixty (60) days after each May 15, beginning with May 15, 2005, the Trustee shall, to the extent that any of the events described in TIA Section 313(a) occurred within the previous twelve months, but not otherwise, mail to each Holder a brief report dated as of such date that complies with TIA Section 313(a). The Trustee also shall comply with TIA Sections 313(b) and (c).

A copy of each report at the time of its mailing to Holders shall be mailed to the Company and filed by the Company with the SEC and each stock exchange or market, if any, on which the Notes are listed or quoted.

The Company shall promptly notify the Trustee if the Notes become listed or quoted on any stock exchange or market and the Trustee shall comply with TIA Section 313(d).

The Company shall pay to the Trustee, Collateral Agent, the Paying Agent and the Registrar (each an “Indemnified Party”) from time to time compensation for their respective services as Trustee, Collateral Agent, Paying Agent or Registrar, as the case may be, as agreed to between each of the Trustee, the Collateral Agent, the Paying Agent and the Registrar, on the one hand and the Company, on the other. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse each Indemnified Party upon request for all reasonable out-of-pocket expenses incurred or made by it in connection with the performance of its duties under, as the case may be, this Indenture or the Collateral Agreements. Such expenses shall include the reasonable fees and expenses of each of such Indemnified Party’s agents and counsel.

The Company and the Guarantors, jointly and severally, hereby indemnify each Indemnified Party and its agents, employees, stockholders and directors and officers for, and holds each of them harmless against, any loss, cost, claim, liability or expense (including taxes) incurred by any of them except to the extent caused by any gross negligence or willful misconduct on the part of such Indemnified Party, arising out of or in connection with this Indenture or the Collateral Agreements, or the administration of this trust, including the reasonable costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending themselves against any claim or liability in connection with the exercise or performance of any of their rights, powers or duties hereunder or thereunder (including the reasonable fees and expenses of counsel). The Trustee shall notify the Company promptly of any claim asserted against an Indemnified Party for which such Indemnified Party has advised the Trustee that it may seek indemnity hereunder or under the Collateral Agreements. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. At

the Indemnified Party’s sole discretion, the Company shall defend the claim and the Indemnified Party shall cooperate and may participate in the defense; provided that any settlement of a claim shall be approved in writing by the Indemnified Party. Alternatively, the Indemnified Party may at its option have separate counsel of its own choosing and the Company shall pay the reasonable fees and expenses of such counsel; provided that the Company shall not be required to pay such fees and expenses if it assumes the Indemnified Party’s defense and there is no conflict of interest between the Company and the Indemnified Party in connection with such defense as reasonably determined by the Indemnified Party. The Company need not pay for any settlement made without its written consent, which consent shall not be unreasonably withheld.

To secure the Company’s and each Guarantor’s payment obligations in this Section 7.07, each Indemnified Party shall have a lien prior to the Notes on all Collateral held or collected by the Trustee, in its capacity as Trustee, except assets or money held in trust to pay principal of or interest on particular Notes.

When an Indemnified Party incurs expenses or renders services after an Event of Default specified in Section 6.01(6) or (7) occurs, such expenses (including the reasonable fees and expenses of its counsel) and the compensation for such services are intended to constitute expenses of administration under any Bankruptcy Code.

The obligations of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture, termination of the Collateral Agreements or the resignation or removal of the Trustee.

The Trustee shall comply with the provisions of TIA Section 312(b)(2) to the extent applicable.

The Trustee may resign by providing written notice to the Company. No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Section 7.08 shall become effective until the acceptance of appointment by the successor Trustee in accordance with this Indenture. The Holders of a majority in aggregate principal amount of the outstanding Notes may remove the Trustee by so notifying the Company and the Trustee in writing and may appoint a successor Trustee. The Company, by a Board Resolution, may remove the Trustee if:

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall notify each Holder in writing of such event and shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount of the outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company and thereupon the resignation or removal of the retiring Trustee shall become

effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, trusts, duties and obligations of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such Trustee so ceasing to act hereunder subject nevertheless to its lien, if any, provided for in Section 7.07. Upon request of the Company or the successor Trustee, such retiring Trustee shall at the expense of the Company and upon payment of the charges of the Trustee then unpaid, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.

If a successor Trustee does not take office within thirty (30) days after the retiring Trustee resigns or is removed, the retiring Trustee, at the Company’s expense, the Company or the Holders of at least 10% in aggregate principal amount of the outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.10, any Holder who satisfies the requirements of TIA Section 310(b) may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

The Company shall give notice of any resignation and any removal of the Trustee and each appointment of a successor Trustee to all Holders in writing. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office.

Notwithstanding any resignation or replacement of the Trustee pursuant to this Section 7.08, the Company’s obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.

If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business (including the administration of the trust created by this Indenture) to, another Person, the resulting, surviving or transferee Person without any further act shall, if such resulting, surviving or transferee Person is otherwise eligible hereunder, be the successor Trustee; provided, however, that such Person shall be otherwise qualified and eligible under this Article Seven.

In case any Notes have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes.

The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein.

References to the Trustee in Sections 7.01(f), 7.02, 7.03, 7.04, and 7.07 shall include the Trustee in its role as Paying Agent and as Collateral Agent.

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other Persons as to other matters and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of an Officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion, or representation by, counsel, unless such Officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or opinion of counsel or representation by counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

Notwithstanding the foregoing, the Opinion of Counsel required by Section 8.01(d)(4)(i) above with respect to a Legal Defeasance need not be delivered if all Notes not theretofore delivered to the Trustee for cancellation (1) have become due and payable or (2) shall become due and payable on the maturity date within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company.

In the event all or any portion of the Notes are to be redeemed through such irrevocable trust, the Company must make arrangements reasonably satisfactory to the Trustee, at the time of such deposit, for the giving of the notice of such redemption or redemptions by the Trustee in the name and at the expense of the Company.

In addition to the Company’s rights under Section 8.01, the Company may terminate all of its obligations under this Indenture (subject to Section 8.03), and this Indenture, the Notes, the Guarantees and the Collateral Agreements, and all Liens created thereunder, shall be discharged and shall cease to be in effect when:

(a) all the Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid as provided in Section 2.07 and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation; or

(b) all Notes not theretofore delivered to the Trustee for cancellation (i) have become due and payable, (ii) shall become due and payable at their stated maturity within one year or (iii) are to be called for redemption within one year under arrangements reasonably satisfactory to the Trustee, and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, and premium, if any, interest and Additional Interest, if any, on the Notes to the date of deposit together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;

Notwithstanding the satisfaction and discharge of this Indenture and of the Notes referred to in Section 8.01 or 8.02, the respective obligations of the Company and the Trustee under Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08 and 2.10, Sections 7.07 and 7.08 and Sections 8.05, 8.06 and 8.07 shall survive until the Notes are no longer outstanding, and thereafter the obligations of the Company and the Trustee under Sections 7.07, 8.04, 8.05 and 8.06 and 8.07 shall survive.

Subject to Section 8.07, after (i) the conditions of Section 8.01 or 8.02 have been satisfied, (ii) the Company has paid or caused to be paid all other sums payable hereunder by the Company and (iii) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent referred to in clause (i) above relating to the satisfaction and discharge of this Indenture have been complied with, the Trustee, upon written request, shall acknowledge in writing the discharge of the Company’s obligations under this Indenture except for those surviving obligations specified in Section 8.03 and the Trustee shall execute and deliver to the Company any document reasonably requested by the Company to effect or evidence any release and discharge of Lien or Collateral Agreement contemplated by Section 12.05.

The Trustee shall hold any U.S. Legal Tender or U.S. Government Obligations deposited with it in the irrevocable trust established pursuant to Section 8.01. The Trustee shall apply the deposited U.S. Legal Tender or the U.S. Government obligations, together with earnings thereon, through the Paying Agent, in accordance with this Indenture and the terms of the irrevocable trust agreement established pursuant to Section 8.01, to the payment of principal of, premium, if any, and interest, and Additional Interest, if any, on the Notes. Anything in this Article Eight to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the Company’s request any U.S. Legal Tender or U.S. Government Obligations held by it as provided in Section 8.01(d) which, in the opinion of a nationally-recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

Subject to Sections 7.07, 8.01 and 8.02, the Trustee and the Paying Agent shall promptly pay to the Company upon written request from the Company any excess U.S. Legal Tender or U.S. Government Obligations held by them at any time. The Trustee and the Paying Agent shall pay to the Company, upon receipt by the Trustee or the Paying Agent, as the case may be, of a written request from the Company any money held by it for the payment of principal, premium, if any, or interest and Additional Interest, if any, that remains unclaimed for two years after payment to the Holders is required, without interest thereon; provided, however, that the Trustee and the Paying Agent before being required to make any payment may, but need not, at the expense of the Company cause to be published once in a newspaper of general circulation in the City of New York or mail to each Holder entitled to such money notice that such money remains unclaimed and that after a date specified therein, which shall be at least thirty (30) days from the date of such publication or mailing, any unclaimed balance of such money then remaining

shall be repaid to the Company, without interest thereon. After payment to the Company, Holders entitled to money must look solely to the Company for payment as general creditors unless an applicable abandoned property law designated another Person, and all liability of the Trustee or Paying Agent with respect to such money shall thereupon cease.

If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or U.S. Government Obligations in accordance with Section 8.01 or 8.02 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s and each Guarantors’ obligations under this Indenture and each other Indenture Document to which such person is a party shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.01 or 8.02 until such time as the Trustee or Paying Agent is permitted to apply all such U.S. Legal Tender or U.S. Government Obligations in accordance with Section 8.01 or 8.02; provided, however, that if the Company has made any payment of premium, if any, or interest and Additional Interest, if any, on or principal of any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.

From time to time, the Company, the Guarantors, the Trustee and, if such amendment, modification or supplement relates to any Collateral Agreement or the Intercreditor Agreement, the Collateral Agent, without the consent of the Holders, may amend, modify, waive or supplement provisions of this Indenture, the Notes, the Guarantees, the Registration Rights Agreement, the Collateral Agreements and the Intercreditor Agreement:

After an amendment, modification, waiver or supplement under this Section 9.01 becomes effective, the Company shall mail to the Holders affected thereby a notice briefly describing the amendment, modification, waiver or supplement. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, modification, waiver or supplement.

Any acknowledgment made pursuant to Section 5.4 of the Intercreditor Agreement or other document or instrument necessary to reinstate the Intercreditor Agreement in connection with a “New Credit Facility” as defined thereunder or to add any new or additional agent, lender, group of lenders or institutional investor under the Credit Agreement (in compliance with the terms of this Indenture) as a party to the Intercreditor Agreement will not constitute an amendment, modification or supplement to this Indenture, the Notes, the Guarantees, the Intercreditor Agreement or any other Collateral Agreement.

The Company and the Guarantors, when authorized by a Board Resolution, and the Trustee, or the Collateral Agent, as applicable, together, with the written consent of the Holder or Holders of at least a majority in aggregate principal amount of the outstanding Notes, may amend or supplement this Indenture, the Notes, any Collateral Agreement, the Guarantees, Registration Rights or the Intercreditor Agreement without notice to any other Holders. The Holder or Holders of a majority in aggregate principal amount of the outstanding Notes may waive compliance by the Company with any provision of this Indenture, any Collateral Agreement, the Notes, or the Intercreditor Agreement without notice to any other Holder. However, no amendment, supplement or waiver, including a waiver pursuant to Section 6.04, shall without the consent of each Holder of each Note affected thereby:

It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof.

After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company shall mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, supplement or waiver.

Every amendment, waiver or supplement of this Indenture, the Notes, the Collateral Agreements, the Guarantees or the Intercreditor Agreement shall comply with the TIA as then in effect.

Until an amendment, waiver or supplement becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note. Subject to the following paragraph, any such Holder or subsequent Holder may revoke the consent as to such Holder’s Note or portion of such Note by written notice to the Trustee and the Company received before the date on which the Trustee and if such amendment, waiver or supplement relates to any Collateral Agreement or the Intercreditor Agreement, the Collateral Agent, receives an Officers’ Certificate certifying that the Holders of the requisite principal amount of Notes have consented (and not theretofore revoked such consent) to the amendment, supplement or waiver. An amendment, waiver or supplement shall become effective upon receipt by the Trustee or the Collateral Agent, as the case may be, of written consents from the Holders of the requisite percentage in principal amount of the outstanding Notes or such Officers’ Certificate, whichever first occurs, and the execution thereof by the Trustee or the Collateral Agent, as the case may be.

The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver, which record date shall be either (i) at least thirty (30) days prior to the first solicitation of such consent or (ii) the date of the most recent list furnished to the Trustee under Section 2.05. If a record date is fixed, then notwithstanding the last sentence of the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than ninety (90) days after such record date.

After an amendment, supplement or waiver becomes effective, it shall bind every Holder unless it makes a change described in any of clauses (1) through (10) of Section 9.02, in which case, the amendment, supplement or waiver shall bind only each Holder of a Note who has consented to it and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note; provided that any such waiver shall not impair or affect the right of any Holder to receive payment of principal of, premium, if any, and interest and Additional Interest, if any, on a Note, on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates without the consent of such Holder.

If an amendment, supplement or waiver changes the terms of a Note, the Trustee may require the Holder of the Note to deliver the Note to the Trustee. The Trustee at the written direction of the Company may place an appropriate notation on the Note about the changed terms and return it to the Holder and the Trustee may place an appropriate notation on any Note thereafter authenticated. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make an appropriate notation, or issue a new Note, shall not affect the validity and effect of such amendment, supplement or waiver. Any such notation or exchange shall be made at the sole cost and expense of the Company.

The Trustee and/or the Collateral Agent, as applicable, shall execute any amendment, supplement or waiver authorized pursuant to this Article Nine; provided that the Trustee or the Collateral Agent, as the case may be, may, but shall not be obligated to, execute any such amendment, supplement or waiver that affects the rights, duties or immunities of the Trustee or the Collateral Agent, as the case may be, under this Indenture, any Collateral Agreement or the Intercreditor Agreement. The Trustee and the Collateral Agent, as the case may be, shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel and an Officers’ Certificate each stating that the execution of any amendment, supplement or waiver authorized pursuant to this Article Nine is authorized or permitted by this Indenture. Such Opinion of Counsel shall not be an expense of the Trustee or the Collateral Agent, as the case may be, and shall be paid for by the Company.

Each Guarantor hereby fully, irrevocably and unconditionally, jointly and severally, unconditionally and irrevocably guarantees (such guarantee to be referred to herein as the “Guarantee”), to each of the Holders, the Trustee and the Collateral Agent and their respective successors and assigns that (i) the principal of, premium, if any and interest, and Additional Interest, if any, on the Notes shall be promptly paid in full when due, subject to any applicable grace period, whether upon redemption pursuant to the terms of the Notes, by acceleration or otherwise, and interest on the overdue principal, if any, and interest on any interest, if any, to the extent lawful, of the Notes and all other Obligations of the Company to the Holders, the Trustee and the Collateral Agent hereunder, thereunder or under any Collateral Agreement shall be promptly paid in full or performed, all in accordance with the terms hereof or thereof; and (ii) in case of any extension of time of payment or renewal of any of the Notes or of any such other obligations, the same shall be promptly paid in full when due or performed in accordance with the terms

of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration or otherwise, subject, however, in the case of clauses (i) and (ii) above, to the limitations set forth in Section 10.03. The Guarantee of each Guarantor shall rank senior in right of payment to all subordinated Indebtedness of such Guarantor and equal in right of payment with all other senior obligations of such Guarantor. Each Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes, this Indenture or any Collateral Agreement, the absence of any action to enforce the same, any waiver or consent by any of the Holders with respect to any provisions hereof or thereof, any release of any other Guarantor, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Guarantor. Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever, in each case, other than the defense that the principal of, premium, if any and interest, and Additional Interest, if any, on the Notes shall have been paid in cash, to the extent of any such payments and covenants that this Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes, this Indenture and in this Guarantee. The obligations of each Guarantor are limited to the maximum amount which, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under this Indenture, shall result in the obligations of such Guarantor under the Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. The net worth of any Guarantor for such purpose shall include any claim of such Guarantor against the Company for reimbursement and any claim against any other Guarantor for contribution. Each Guarantor may consolidate with or merge into or sell its assets to the Company or another Guarantor without limitation in accordance with Sections 5.01, 4.10 and 10.04. If any Holder, the Collateral Agent or the Trustee is required by any court or otherwise to return to the Company, any Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to the Company or any Guarantor, any amount paid by the Company or any Guarantor to the Trustee, the Collateral Agent or such Holder, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Guarantor further agrees that, as between each Guarantor, on the one hand, and the Holders, the Collateral Agent and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Six for the purposes of this Guarantee notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any acceleration of such obligations as provided in Article Six, such obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purpose of this Guarantee.

A Guarantor will be automatically and unconditionally released from its Guarantee (and may subsequently dissolve) without any action required on the part of the Trustee or any Holder:

The Trustee shall promptly deliver an appropriate instrument evidencing such release upon receipt of a request by the Company accompanied by an Officers’ Certificate certifying as to the compliance with this Section 10.02. Any Guarantor not so released remains liable for the full amount of its Guarantee as provided in this Article Ten.

Each Guarantor and, by its acceptance hereof, each of the Holders hereby confirms that it is the intention of all such parties that the guarantee by such Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or conveyance for purposes of any Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To effectuate the foregoing intention, the Holders and such Guarantor hereby irrevocably agree that the obligations of such Guarantor under the Guarantee shall be limited to the maximum amount as shall, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to Section 10.05, result in the obligations of such Guarantor under the Guarantee not constituting such fraudulent transfer or conveyance.

Each Guarantor (other than any Guarantor whose Guarantee is to be released in accordance with the terms of the Guarantee and this Indenture in connection with any transaction complying with Section 4.10) will not, and the Company will not cause or permit any Guarantor to, consolidate with or merge with or into any Person other than the Company or any other Guarantor unless:

Any merger or consolidation of (i) a Guarantor with and into the Company (with the Company being the surviving entity) or another Guarantor or (ii) a Guarantor or the Company with an Affiliate organized solely for the purpose of reincorporating such Guarantor or the Company in another jurisdiction in the United States or any state thereof or the District of Columbia need only comply with (A) clause (3) of Section 5.01; and (B) (x) clause (1)(b)(y) of Section 5.01 and (y) clause (2) of the immediately preceding paragraph.

In order to provide for just and equitable contribution among the Guarantors, the Guarantors agree, inter se, that each Guarantor that makes a payment or distribution under a Guarantee shall be entitled to a pro rata contribution from each other Guarantor hereunder based on the net assets of each other Guarantor. The preceding sentence shall in no way affect the rights of the Holders of Notes to the benefits of this Indenture, the Notes or the Guarantees.

Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby.

Each Guarantor covenants to the extent permitted by law that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive such Guarantor from performing its Guarantee as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Guarantee; and each Guarantor hereby expressly waives to the extent permitted by law all benefit or advantage of any such law, and covenants that it shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.

To evidence their guarantees to the Holders set forth in this Article Ten, each of the U.S. Guarantors hereby agrees to execute the notation of Guarantee in substantially the applicable forms included in the Notes attached as Exhibit A and Exhibit B. Each such notation of Guarantee shall be signed on behalf of each U.S. Guarantor by an Officer, Secretary or an assistant Secretary by manual or facsimile signature.

If an Officer whose signature is on a notation of the Guarantee was an Officer at the time of such execution but no longer holds that office or position at the time the Trustee authenticates a Note on which such notation of Guarantee appears, such notation of Guarantee shall nevertheless be valid.

Each Guarantor hereby agrees that its Guarantee set forth in Section 10.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Guarantee.

The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantors.

If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. Any provision of the TIA which is required to be included in a qualified Indenture, but not expressly included herein, shall be deemed to be included by this reference.

Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by telecopier, regular mail, or registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

if to the Company:

Altra Industrial Motion, Inc.
14 Hayward Street
Quincy, Massachusetts 02171
Facsimile No. (617) 689-6202
Attention: Michael L. Hurt

with a copy to:

Weil Gotshal & Manges, LLP
201 Redwood Shores Parkway
Redwood Shores, California 94065
Facsimile No. (650) 802-3100
Attention: Curtis L. Mo, Esq.

if to the Trustee and Collateral Agent:

The Bank of New York Trust Company, N.A.
700 S. Flower Street, Ste. 500
Los Angeles, California 90017
Facsimile No. (213) 630-6298
Attention: Sandee Parks

with a copy to:

Emmet, Marvin & Martin, LLP
120 Broadway
New York, NY 10271
Facsimile No. (212) 238-3100
Attention: Irv Apar, Esq.

Each of the Company and the Trustee by written notice to each other may designate additional or different addresses for notices to such Person. Any notice or communication to the Company shall be

deemed to have been given or made as of the date so delivered if personally delivered; when receipt is acknowledged, if faxed; and five (5) calendar days after mailing if sent by registered or certified mail, postage prepaid. Notwithstanding anything to the contrary contained herein, notices to the Trustee shall be effective only upon actual receipt by the Trustee.

Any notice or communication mailed to a Holder shall be mailed to such Holder by first class mail or other equivalent means at such Holder’s address as it appears on the registration books of the Registrar and shall be sufficiently given to such Holder if so mailed within the time prescribed.

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it, except that notices to the Trustee shall be deemed duly given only upon receipt.

Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture, any Collateral Agreement, any Guarantee or the Notes. The Company, the Trustee, the Collateral Agent, the Registrar and any other Person shall have the protection of TIA Section 312(c).

Upon any request or application by the Company or any Guarantor to the Trustee or the Collateral Agent, as the case may be, to take any action under this Indenture or any Collateral Agreement, the Company shall furnish to the Trustee or the Collateral Agent, as the case may be, upon request:

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture or any Collateral Agreement, other than the Officers’ Certificate required by Section 4.06, shall include:

The Trustee may make reasonable rules in accordance with the Trustee’s customary practices for action by or at a meeting of Holders. The Paying Agent or Registrar may make reasonable rules for its functions.

A “Legal Holiday” used with respect to a particular place of payment is a Saturday, a Sunday or a day on which banking institutions in New York, New York, in the city in which the Corporate Trust Office of the Trustee is located or at such place of payment are not required to be open. If a payment date is a Legal Holiday at such place, payment may be made at such place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.

THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE.

This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any of its Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

A past, present or future director, officer, employee, stockholder or incorporator, as such, of the Company or a Guarantor shall not have any liability for any obligations of the Company or the Guarantors under the Notes, the Guarantees, the Collateral Agreements or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder, by accepting a Note, waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Notes.

All agreements of the Company and the Guarantors in this Indenture, the Notes, and the Guarantees shall bind their successors. All agreements of each of the Trustee and the Collateral Agent in this Indenture shall bind its respective successors.

All parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together shall represent the same agreement.

In case any one or more of the provisions in this Indenture, the Notes or in the Guarantees shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law.

THE COMPANY AND EACH GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE, THE NOTES, THE GUARANTEES, THE COLLATERAL AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED BY THIS INDENTURE.

Subject to Section 12.03, Collateral may be released from the Lien and security interest created by the Security Documents at any time or from time to time in accordance with the provisions of the Collateral Agreements, including the Intercreditor Agreement, or as provided hereby. Upon the request of the Company pursuant to an Officers’ Certificate certifying, and an Opinion of Counsel stating, that all conditions precedent hereunder have been met and without the consent of any Holder, the Company and the Guarantors will be entitled to releases of assets included in the Collateral from the Liens securing the obligations under the Notes and the Guarantees under any one or more of the following circumstances:

Upon receipt of such Officers’ Certificate and Opinion of Counsel and any necessary or proper instruments of termination, satisfaction or release prepared by the Company, the Collateral Agent shall execute, deliver or acknowledge such instruments or releases to evidence the release of any Collateral permitted to be released pursuant to this Indenture or the Collateral Agreements, including the Intercreditor Agreement.

The Liens on, and pledges of, all Collateral will also be terminated and released upon (i) payment in full of the principal of, premium, if any, on, accrued and unpaid interest and Additional Interest, if any, on the Notes and all other Obligations hereunder, the Guarantees and the Collateral Agreements that are due and payable at or prior to the time such principal, premium, if any, accrued and unpaid interest and Additional Interest, if any, are paid, (ii) a satisfaction and discharge of this Indenture as described above under Section 8.02 and (iii) the occurrence of a Legal Defeasance or Covenant Defeasance as described above under Section 8.01.

In the event that the Company or any Guarantor has sold, exchanged, or otherwise disposed of or proposes to sell, exchange or otherwise dispose of any portion of the Collateral that may be sold, exchanged or otherwise disposed of by the Company or such Guarantor, and the Company or such Guarantor requests in writing the Collateral Agent to furnish a written disclaimer, release or quit-claim of any interest in such property under this Indenture and the Collateral Agreements, the Collateral Agent shall execute, acknowledge and deliver to the Company or such Guarantor (in proper form-prepared by the Company or such Guarantor) such an instrument promptly after satisfaction of the conditions set forth herein for delivery of any such release. Notwithstanding the preceding sentence, all purchasers and grantees of any property or rights purporting to be released herefrom shall be entitled to rely upon any release executed by the Collateral Agent hereunder as sufficient for the purpose of this Indenture and as constituting a good and valid release of the property therein described from the Lien of this Indenture or of the Collateral Agreements.

No purchaser or grantee of any property or rights purporting to be released herefrom shall be bound to ascertain the authority of the Trustee or the Collateral Agent to execute the release or to inquire as to the existence of any conditions herein prescribed for the exercise of such authority; nor shall any purchaser or grantee of any property or rights permitted by this Indenture to be sold or otherwise disposed of by the Company be under any obligation to ascertain or inquire into the authority of the Company to make such sale or other disposition.

Subject to the provisions of the applicable Collateral Agreements, the Trustee and each Holder, by acceptance of its Note(s) agrees that (a) the Collateral Agent shall execute and deliver the Collateral Agreements and act in accordance with the terms thereof, (b) the Collateral Agent may, in its sole discretion and without the consent of the Trustee or the Holders, take all actions it deems necessary or appropriate in order to (i) enforce any of the terms of the Collateral Agreements and (ii) collect and receive any and all amounts payable in respect of the Obligations of the Company and the Guarantors hereunder and under the Notes, the Guarantees and the Collateral Agreements and (c) the Collateral Agent shall have power to institute and to maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Collateral by any act that may be unlawful or in violation of the Collateral Agreements or this Indenture, and suits and proceedings as the Collateral Agent may deem expedient to preserve or protect its interests and the interests of the Trustee and the Holders in the Collateral (including the power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest thereunder or be prejudicial to the interests of the Collateral Agent, the Holders or the Trustee). Notwithstanding the foregoing, the Collateral Agent may, at the expense of the Company, request the direction of the Holders with respect to any such actions and upon receipt of the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Notes, shall take such actions; provided that all actions so taken shall, at all times, be in conformity with the requirements of the Intercreditor Agreement.

The Collateral Agent is authorized to receive any funds for the benefit of itself, the Trustee and the Holders distributed under the Collateral Agreements and to the extent not prohibited under the Intercreditor Agreement, for turnover to the Trustee to make further distributions of such funds to itself, the Trustee and the Holders in accordance with the provisions of Section 6.10 and the other provisions of this Indenture.

This Article Twelve, the Security Agreement and the Mortgages are subject to the terms, limitations and conditions set forth in the Intercreditor Agreement.

SIGNATURES

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the date first written above.

	ALTRA INDUSTRIAL MOTION, INC.


	By:
		Name:
		Title:


	THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee and Collateral Agent


	By:
		Name:
		Title:


	AMERICAN ENTERPRISE MPT CORP., as a Subsidiary Guarantor


	By:
		Name:
		Title:


	AMERICAN ENTERPRISES MPT HOLDINGS, L.P., as a Subsidiary Guarantor


	By:
		Name:
		Title:

	AMERIDRIVES INTERNATIONAL, L.P., as a Subsidiary Guarantor


	By:
		Name:
		Title:


	BOSTON GEAR LLC, as a Subsidiary Guarantor


	By:
		Name:
		Title:


	FORMSPRAG LLC, as a Subsidiary Guarantor


	By:
		Name:
		Title:


	THE KILIAN COMPANY, as a Subsidiary Guarantor


	By:
		Name:
		Title:


	KILIAN MANUFACTURING CORPORATION, as a Subsidiary Guarantor


	By:
		Name:
		Title:


		*Indenture*

	NUTTALL GEAR LLC, as a Subsidiary Guarantor


	By:
		Name:
		Title:


	WARNER ELECTRIC INTERNATIONAL HOLDING, INC., as a Subsidiary Guarantor


	By:
		Name:
		Title:


	WARNER ELECTRIC LLC, as a Subsidiary Guarantor


	By:
		Name:
		Title:


	WARNER ELECTRIC TECHNOLOGY LLC, as a Subsidiary Guarantor


	By:
		Name:
		Title:


		*Indenture*

EXHIBIT A

[FORM OF 9% SENIOR SECURED NOTE]

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A ‘‘QUALIFIED INSTITUTIONAL BUYER’’ (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS A NON-U.S. PURCHASER AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (C) IT IS AN INSTITUTIONAL ‘‘ACCREDITED INVESTOR’’ WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A ‘‘QUALIFIED INSTITUTIONAL BUYER’’ AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PURCHASERS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL ‘‘ACCREDITED INVESTOR’’ WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S, OR TRANSFER AGENT’S, AS APPLICABLE, RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E), OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE OR TRANSFER AGENT.

A-1

ALTRA INDUSTRIAL MOTION, INC.

9% SENIOR SECURED NOTES DUE 2011

CUSIP No.

No.

Altra Industrial Motion, Inc., a Delaware corporation, for value received promise to pay to , or registered assigns, the principal sum of DOLLARS ($[ ]) on December 1, 2011.

Interest Rate: 9%

Interest Payment Dates: June 1 and December 1, commencing June 1, 2005.

Record Dates: May 15 and November 15

Reference is made to the further provisions of this Note contained on the reverse side of this Note, which will for all purposes have the same effect as if set forth at this place.

IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually or by facsimile by its duly authorized officer.

	ALTRA INDUSTRIAL MOTION, INC.


	By:
		Name:
		Title:

Dated: , 2004

A-2

TRUSTEE CERTIFICATE OF AUTHENTICATION

This is one of the 9% Senior Secured Notes due 2011 referred to in the within-mentioned Indenture.

	THE BANK OF NEW YORK TRUST COMPANY,
	N.A, as Trustee


Dated: , 2004	By:
		Authorized Signatory

A-3

(REVERSE OF SECURITY)

9% SENIOR SECURED NOTES DUE 2011

1. Interest.

Altra Industrial Motion, Inc., a Delaware corporation (the “Issuer”), promises to pay interest on the principal amount of this Note at the rate per annum shown above. Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from and including the date of issuance. The Issuer will pay interest semi-annually in arrears on each Interest Payment Date, commencing June 1, 2005. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

2. Method of Payment.

The Issuer shall pay interest on the Notes to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Notes are cancelled on registration of transfer or registration of exchange after such Record Date, and on or before such Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Issuer shall pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts (“U.S. Legal Tender”). However, the Issuer may pay principal and interest by check payable in such U.S. Legal Tender. The Issuer may deliver any such interest payment to the Paying Agent or to a Holder at the Holder’s registered address.

3. Paying Agent and Registrar.

Initially, The Bank of New York (the “Trustee”) will act as Paying Agent and Registrar. The Issuer may change any Paying Agent, Registrar or co-Registrar without notice to the Holders. The Company may act as Paying Agent or Registrar.

4. Indenture.

The Notes and the Guarantees were issued under an Indenture, dated as of November 30, 2004 (the “Indenture”), among the Issuer, the Guarantors named therein, the Trustee and the Collateral Agent. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) (the “TIA”), as in effect on the date of the Indenture until such time as the Indenture is qualified under the TIA, and thereafter as in effect on the date on which the Indenture is qualified under the TIA. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to in the Indenture and the TIA for a statement of such terms. The Notes are senior secured obligations of the Issuer. Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time. Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein.

A-4

5. Redemption on or After December 1, 2008.

(a) Optional Redemption. Except as described below, the Notes are not redeemable before December 1, 2008. On or after December 1, 2008, the Company may redeem the Notes, at its option, in whole or in part, upon not less than 30 nor more than 60 days’ notice, at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on December 1 of the year set forth below:

Year	Percentage
2008	104.500	%
2009	102.250	%
2010 and thereafter	100.000	%

(b) Optional Redemption upon Equity Offerings. In addition, at any time, or from time to time, until December 1, 2007, the Company may, at its option, use an amount not to exceed the net cash proceeds of one or more Equity Offerings to redeem up to 35% of the aggregate principal amount of the Notes (which includes Additional Notes, if any) originally issued under the Indenture at a redemption price of 109% of the aggregate principal amount thereof, plus accrued and unpaid interest and Additional Interest, thereon, if any, to the date of redemption; provided that:

(1) at least 65% of the original principal amount of Notes (which includes Additional Notes, if any) issued under the Indenture remains outstanding immediately after any such redemption; and

(2) the Company makes such redemption not more than 120 days after the consummation of any such Equity Offering.

(c) Notice of Redemption. Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at such Holder’s registered address. If fewer than all of the Notes are to be redeemed, at any time, selection of Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee reasonably determines to be fair and appropriate; provided that no partial redemption will reduce the principal amount of a Note not redeemed to a denomination of less than $1,000; and provided, further, that any such partial redemption made with the proceeds of an Equity Offering will be made only on a pro rata basis or on as nearly a pro rata basis as practicable (subject to the procedures of the DTC or any other depository) unless such method is otherwise prohibited. Notes in denominations of $1,000 or more may be redeemed in part.

Except as set forth in the Indenture, if monies for the redemption of the Notes called for redemption shall have been deposited with the Paying Agent for redemption on such redemption date sufficient to pay such redemption price plus accrued and unpaid interest and

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Additional Interest, if any, the Notes called for redemption will cease to bear interest from and after such redemption date, and the only remaining right of the Holders of such Notes will be to receive payment of the redemption price plus accrued and unpaid interest and Additional Interest, if any, as of the redemption date upon surrender to the Paying Agent of the Notes redeemed.

6. Offers to Purchase.

Sections 4.10 and 4.22 of the Indenture provide that after certain Asset Sales and upon the occurrence of a Change of Control and subject to further limitations contained therein, the Issuer will make an offer to purchase the Notes in accordance with the procedures set forth in the Indenture.

7. Registration Rights.

Pursuant to the Registration Rights Agreement among the Issuer, the Guarantors and the Initial Purchaser, the Issuer will be obligated to consummate an exchange offer. Upon such exchange offering, the Holders of the Initial Notes shall have the right, subject to compliance with securities laws, to exchange such Initial Notes for Notes, which have been registered under the Securities Act, in like principal amount and having terms identical in all material respects to the Initial Notes. The Holders of the Initial Notes shall be entitled to receive certain Additional Interest payments in the event such exchange offer is not consummated and upon certain other conditions, all pursuant to and in accordance with the terms of the Registration Rights Agreement.

8. Denominations; Transfer; Exchange.

The Notes are in registered form, without coupons, in denominations of $1,000 and integral multiples thereof. A Holder shall register the transfer of or exchange of Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes, fees or similar governmental charges payable in connection therewith as permitted by the Indenture. The Registrar need not register the transfer of or exchange of any Notes or portions thereof selected for redemption.

9. Persons Deemed Owners.

The registered Holder of a Note shall be treated as the owner of such Note for all purposes.

10. Unclaimed Money.

If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent may pay the money without interest thereon back to the Issuer. After that, all liability of the Trustee and such Paying Agent with respect to such money shall cease.

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11. Discharge Prior to Redemption or Maturity.

If the Issuer at any time deposit with the Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the principal of and interest on the Notes to redemption or Maturity and comply with the other provisions of the Indenture relating thereto, the Issuer shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, except for the rights of Holders to receive payments in respect of the principal of, and premium, if any, interest and Additional Interest, if any, on the Notes when such payments are due from the deposits referred to above.

12. Amendment; Supplement; Waiver.

Subject to certain exceptions, the Indenture, the Collateral Agreements, the Notes or the Guarantees may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, and any existing Default or Event of Default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without consent of any Holder, the parties thereto may amend or supplement the Indenture, the Collateral Agreements, the Notes or the Guarantees to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Notes or Guarantees in addition to or in place of certificated Notes or Guarantees, comply with the TIA, or comply with Article Five of the Indenture or make any other change that does not adversely affect in any material respect the rights of any Holder of a Note.

13. Restrictive Covenants.

The Indenture imposes certain limitations on the ability of the Issuer and the Restricted Subsidiaries to, among other things, incur additional Indebtedness or Liens, make payments in respect of their Capital Stock or certain Indebtedness, enter into transactions with Affiliates, create dividend or other payment restrictions affecting Subsidiaries, merge or consolidate with any other Person, sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets. Such limitations are subject to a number of important qualifications and exceptions. The Issuer must annually report to the Trustee on compliance with such limitations.

14. Successors.

When a successor assumes, in accordance with the Indenture, all the obligations of its predecessor under the Indenture, the Collateral Agreements, the Notes and the Guarantees, the predecessor will be released from those obligations.

15. Defaults and Remedies.

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direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest) if it determines that withholding notice is in their interest.

16. Trustee Dealings with Issuer.

Subject to the terms of the TIA and the Indenture, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of the Notes and may otherwise deal with the Issuer, the Subsidiaries or their respective Affiliates as if it were not the Trustee.

17. No Recourse Against Others.

No past, present or future stockholder, director, officer, employee or incorporator, as such, of the Issuer or the Guarantors shall have any liability for any obligation of the Issuer under the Notes, the Guarantees, the Collateral Agreements or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes.

18. Guarantees.

Payment of principal and interest and Additional Interest, if any, is unconditionally guaranteed, jointly and severally, by each of the Guarantors.

19. Authentication.

This Note shall not be valid until the Trustee or Authenticating Agent manually signs the certificate of authentication on this Note.

20. Governing Law.

THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS NOTE, THE GUARANTEES, THE COLLATERAL AGREEMENTS AND THE INDENTURE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.

21. Waiver of Jury Trial.

Each of the parties hereto and the holders (by their acceptance of the Note) hereby irrevocably waives, to the fullest extent permitted by law, any and all right to trial by jury in any action or proceeding arising out of or in connection with the Indenture, this Note, the Guarantees, the Collateral Agreements or the transactions contemplated by the Indenture.

22. Abbreviations and Defined Terms.

Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

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The Issuer will furnish to any Holder of a Note upon written request and without charge a copy of the Indenture. Requests may be made to: Altra Industrial Motion, Inc., 14 Hayward Street, Quincy, Massachusetts 02171.

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FORM OF GUARANTEE

Each of the undersigned and their respective successors under the Indenture (collectively, the “Guarantors”) has jointly and severally with each of the other Guarantors, irrevocably and unconditionally guaranteed, on a senior secured basis to the extent set forth in the Indenture, dated as of November 30, 2004, by and among the Issuer, the Guarantors and The Bank of New York Trust Company, N.A. as Trustee and Collateral Agent (the “Indenture”), (i) the due and punctual payment of the principal of, premium, if any, and interest and Additional Interest, if any, on the Notes, whether at maturity, by acceleration or otherwise, and the due and punctual performance of all other obligations of the Issuer to the Holders or the Trustee all in accordance with the terms set forth in Article Ten of the Indenture and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Capitalized terms used herein have the meanings assigned to them in the Indenture unless otherwise indicated.

THE OBLIGATIONS OF THE UNDERSIGNED TO HOLDERS OF THE NOTES AND TO THE TRUSTEE PURSUANT TO THIS NOTATION OF GUARANTEE (THE “GUARANTEE”) AND THE INDENTURE ARE EXPRESSLY SET FORTH IN ARTICLE TEN OF THE INDENTURE AND REFERENCE IS HEREBY MADE TO THE INDENTURE FOR THE PRECISE TERMS OF THE GUARANTEE AND ALL OTHER PROVISIONS OF THE INDENTURE TO WHICH THE GUARANTEE RELATES. EACH HOLDER OF A NOTE, BY ACCEPTING THE SAME, (A) AGREES TO AND SHALL BE BOUND BY SUCH PROVISIONS AND (B) APPOINTS THE TRUSTEE ATTORNEY-IN-FACT FOR SUCH HOLDER FOR SUCH PURPOSES.

This Guarantee shall be governed by and construed in accordance with the laws of the State of New York.

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IN WITNESS WHEREOF, each Guarantor has caused its Guarantee to be duly executed.

	AMERICAN ENTERPRISE MPT CORP., as Guarantor


	By:
		Name:
		Title:


	AMERICAN ENTERPRISES MPT HOLDINGS, L.P., as Guarantor


	By:
		Name:
		Title:


	AMERIDRIVES INTERNATIONAL, L.P., as Guarantor


	By:
		Name:
		Title:


	BOSTON GEAR LLC, as Guarantor


	By:
		Name:
		Title:


	FORMSPRAG LLC, as Guarantor


	By:
		Name:
		Title:


	KILIAN MANUFACTURING CORPORATION, as Guarantor


	By:
		Name:
		Title:

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	NUTTALL GEAR LLC, as Guarantor


	By:
		Name:
		Title:


	THE KILIAN COMPANY, as Guarantor


	By:
		Name:
		Title:



	WARNER ELECTRIC INTERNATIONAL HOLDING, INC., as Guarantor


	By:
		Name:
		Title:


	WARNER ELECTRIC LLC, as Guarantor


	By:
		Name:
		Title:


	WARNER ELECTRIC TECHNOLOGY LLC, as Guarantor


	By:
		Name:
		Title:

A-12

ASSIGNMENT FORM

If you the Holder want to assign this Note, fill in the form below and have your signature guaranteed:

I or we assign and transfer this Note to:

(Print or type name, address and zip code and
social security or tax ID number of assignee)

and irrevocably appoint

agent to transfer this Note on the books of the Issuer. The agent may substitute another to act for him.

Dated:			Signed:
				(Sign exactly as your name appears on the other side of this Note)

Signature Guarantee:

In connection with any transfer of this Note occurring prior to the date which is the earlier of (i) the date of the declaration by the SEC of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), covering resales of this Note (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) November 30, 2006, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that this Note is being transferred:

[Check One]

(1) o to the Issuer or a subsidiary thereof; or

(2) o pursuant to and in compliance with Rule 144A under the Securities Act; or

(3) o to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that has furnished to the Trustee a signed letter containing certain representations and agreements (the form of which letter can be obtained from the Trustee); or

(4) o outside the United States to a person other than a “U.S. person” in compliance with Rule 904 of Regulation S under the Securities Act; or

(5) o pursuant to the exemption from registration provided by Rule 144 under the Securities Act; or

(6) o pursuant to an effective registration statement under the Securities Act.

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Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered Holder thereof; provided that if box (3), (4) or (5) is checked, the Issuer or the Trustee may require, prior to registering any such transfer of the Notes, in its sole discretion, such legal opinions, certifications (including an investment letter in the case of box (3) or (4)) and other information as the Trustee or the either Issuer has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

If none of the foregoing boxes is checked, the Trustee or Registrar shall not be obligated to register this Note in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.15 of the Indenture shall have been satisfied.

Dated:			Signed:
				(Sign exactly as your name appears on the other side of this Note)

Signature Guarantee:

TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Dated:
			NOTICE: To be executed by an executive officer

A-14

[OPTION OF HOLDER TO ELECT PURCHASE]

If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.10 or 4.22 of the Indenture, check the appropriate box:

Section 4.10 o

Section 4.22 o

If you want to elect to have only part of this Note purchased by the Issuer pursuant to Section 4.10 or 4.22 of the Indenture, state the amount you elect to have purchased:

A-15

EXHIBIT B

[FORM OF 9% SENIOR SECURED EXCHANGE NOTE]

ALTRA INDUSTRIAL MOTION, INC.

9% SENIOR SECURED NOTES DUE 2011

CUSIP No.

No.

Altra Industrial Motion, Inc., a Delaware corporation, for value received promise to pay to , or registered assigns, the principal sum of DOLLARS ($[ ]) on December 1, 2011.

Interest Rate: 9%

Interest Payment Dates: June 1 and December 1, commencing June 1, 2005.

Record Dates: May 15 and November 15

Reference is made to the further provisions of this Note contained on the reverse side of this Note, which will for all purposes have the same effect as if set forth at this place.

IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually or by facsimile by its duly authorized officer.

	ALTRA INDUSTRIAL MOTION, INC.


	By:
		Name:
		Title:

Dated: , 2004

B-1

TRUSTEE CERTIFICATE OF AUTHENTICATION

This is one of the 9% Senior Secured Notes due 2011 referred to in the within-mentioned Indenture.

	THE BANK OF NEW YORK TRUST COMPANY, N.A, as Trustee


Dated: , 2004	By:
	Authorized Signatory

B-2

(REVERSE OF SECURITY)

9% SENIOR SECURED NOTES DUE 2011

1. Interest.

2. Method of Payment.

3. Paying Agent and Registrar.

4. Indenture.

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5. Redemption on or After December 1, 2008.

Year	Percentage
2008	104.500	%
2009	102.250	%
2010 and thereafter	100.000	%

(1) at least 65% of the original principal amount of Notes (which includes Additional Notes, if any) issued under the Indenture remains outstanding immediately after any such redemption; and

(2) the Company makes such redemption not more than 120 days after the consummation of any such Equity Offering.

(c) Notice of Redemption. Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at such Holder’s registered address. If fewer than all of the Notes are to be redeemed, at any time, selection of Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee reasonable determines to be fair and appropriate; provided that no partial redemption will reduce the principal amount of a Note not redeemed to a denomination of less than $1,000; and provided, further, that any such partial redemption made with the proceeds of an Equity Offering will be made only on a pro rata basis or on as nearly a pro rata basis as practicable (subject to the procedures of the DTC or any other depository) unless such method is otherwise prohibited. Notes in denominations of $1,000 or more may be redeemed in part.

B-4

6. Offers to Purchase.

7. Denominations; Transfer; Exchange.

8. Persons Deemed Owners.

The registered Holder of a Note shall be treated as the owner of such Note for all purposes.

9. Unclaimed Money.

10. Discharge Prior to Redemption or Maturity.

11. Amendment; Supplement; Waiver.

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any existing Default or Event of Default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without consent of any Holder, the parties thereto may amend or supplement the Indenture, the Collateral Agreements, the Notes or the Guarantees to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Notes or Guarantees in addition to or in place of certificated Notes or Guarantees, comply with the TIA, or comply with Article Five of the Indenture or make any other change that does not adversely affect in any material respect the rights of any Holder of a Note.

12. Restrictive Covenants.

13. Successors.

14. Defaults and Remedies.

If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding may declare all the Notes to be due and payable in the manner, at the time and with the effect provided in the Indenture. Holders of Notes may not enforce the Indenture except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has received indemnity satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest) if it determines that withholding notice is in their interest.

15. Trustee Dealings with Issuer.

16. No Recourse Against Others.

No past, present or future stockholder, director, officer, employee or incorporator, as such, of the Issuer or the Guarantors shall have any liability for any obligation of

B-6

the Issuer under the Notes, the Guarantees, the Collateral Agreements or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes.

17. Guarantees.

Payment of principal and interest and Additional Interest, if any, is unconditionally guaranteed, jointly and severally, by each of the Guarantors.

18. Authentication.

This Note shall not be valid until the Trustee or Authenticating Agent manually signs the certificate of authentication on this Note.

19. Governing Law.

THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS NOTE, THE GUARANTEES, THE COLLATERAL AGREEMENTS AND THE INDENTURE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.

20. Waiver of Jury Trial.

21. Abbreviations and Defined Terms.

B-7

FORM OF GUARANTEE

Each of the undersigned and their respective successors under the Indenture (collectively, the “Guarantors”) has jointly and severally with each of the other Guarantors, irrevocably and unconditionally guaranteed, on a senior secured basis to the extent set forth in the Indenture, dated as of November 30, 2004, by and among the Issuer, the Guarantors and The Bank of New York Trust Company, N.A. as Trustee and Collateral Agent (the “Indenture”),
(i) the due and punctual payment of the principal of, premium, if any, and interest and Additional Interest, if any, on the Notes, whether at maturity, by acceleration or otherwise, and the due and punctual performance of all other obligations of the Issuer to the Holders or the Trustee all in accordance with the terms set forth in Article Ten of the Indenture and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Capitalized terms used herein have the meanings assigned to them in the Indenture unless otherwise indicated.

This Guarantee shall be governed by and construed in accordance with the laws of the State of New York.

B-8

IN WITNESS WHEREOF, each Guarantor has caused its Guarantee to be duly executed.

		[NAME OF GUARANTOR], as Guarantor


		By:
			Name:
			Title:

B-9

ASSIGNMENT FORM

If you the Holder want to assign this Note, fill in the form below and have your signature guaranteed:

I or we assign and transfer this Note to:




(Print or type name, address and zip code and
social security or tax ID number of assignee)

and irrevocably appoint
agent to transfer this Note on the books of the Issuer. The agent may substitute another to act for him.

Dated:	Signed:
		(Sign exactly as your name appears on the other side of this Note)

Signature Guarantee:

B-10

[OPTION OF HOLDER TO ELECT PURCHASE]

If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.10 or 4.22 of the Indenture, check the appropriate box:

Section 4.10 o

Section 4.22 o

If you want to elect to have only part of this Note purchased by the Issuer pursuant to Section 4.10 or 4.22 of the Indenture, state the amount you elect to have purchased:

$


Dated:

		NOTICE:	The signature on this assignment must correspond with the name as it appears upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever and be guaranteed by the endorser’s bank or broker.




	Signature Guarantee:

B-11

EXHIBIT C

FORM OF LEGEND FOR GLOBAL NOTES

Any Global Note authenticated and delivered hereunder shall bear a legend (which would be in addition to any other legends required in the case of a Restricted Security) in substantially the following form:

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

C-1

EXHIBIT D

Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors

The Bank of New York Trust Company, N.A.

700 S. Flower Street, Ste. 500

Los Angeles, California 90017

Re: 9% Senior Secured Notes due 2011 (the “Notes”) of Altra Industrial Motion, Inc. (the “Company”)

Ladies and Gentlemen:

In connection with our proposed purchase of $aggregate principal amount at maturity of the Notes, we confirm that:

1. We have received a copy of the Offering Circular (the “Offering Circular”), dated November 22, 2004, relating to the Notes and such other information as we deem necessary in order to make our investment decision. We acknowledge that we have read and agreed to the matters stated in the section entitled “Notice to Investors” of the Offering Circular.

2. We understand that any subsequent transfer of the Notes is subject to certain restrictions and conditions set forth in the Indenture dated as of November 30, 2004 relating to the Notes (the “Indenture”) and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the “Securities Act”).

3. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell or otherwise transfer any Notes prior to the date which is within two years after the original issuance of the Notes or the last date on which the Note is owned by the Company or any affiliate of the Company, we will do so only (i) to the Company or any of its subsidiaries, (ii) inside the United States in accordance with Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act), (iii) inside the United States to an institutional “accredited investor” (as defined below) provided that, prior to such transfer, the transferee furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you a signed letter containing certain representations and agreements relating to the restrictions on transfer of the Notes, substantially in the form of this letter, (iv) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (v) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available) or (vi) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person

D-1

purchasing any of the Notes from us a notice advising such purchaser that resales of the Notes are restricted as stated herein.

4. We are not acquiring the Notes for or on behalf of, and will not transfer the Notes to, any pension or welfare plan (as defined in Section 3 of the Employee Retirement Income Security Act of 1974), except as permitted in the section entitled “Notice to Investors” of the Offering Circular.

5. We understand that, on any proposed resale of any Notes, we will be required to furnish to you and the Company such certification, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect.

6. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or their investment, as the case may be.

7. We are acquiring the Notes purchased by us for our own account or for one or more accounts (each of which is an institutional “accredited investor”) as to each of which we exercise sole investment discretion.

8. We are not acquiring Notes with a view to any distribution thereof in a transaction that would violate the Securities Act or the securities laws of any state of the United States or any other applicable jurisdiction; provided that the disposition of our property and the property of any accounts for which we are acting as fiduciary shall remain at all times within our and their control.

You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby, and we agree to notify you promptly if any of our representations or warranties herein cease to be accurate and complete.

This letter shall be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of laws.

	Very truly yours,

		[Name of Transferee]


	By:
	Authorized Signature

D-2

EXHIBIT E

Form of Certificate To Be
Delivered in Connection with
Transfers Pursuant to Regulation S

The Bank of New York Trust Company, N.A.

700 S. Flower Street, Ste. 500

Los Angeles, California 90017

Re: 9% Senior Secured Notes due 2011 (the “Notes”) of Altra Industrial Motion, Inc. (the “Company”)

Ladies and Gentlemen:

In connection with our proposed sale of $aggregate principal amount at maturity of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, we represent that:

1. the offer of the Notes was not made to a person in the United States;

2. either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States;

3. no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable;

4. the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and

5. we have advised the transferee of the transfer restrictions applicable to the Notes.

E-1

You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S.

		Very truly yours,


		[Name of Transferee]


	By:
		Authorized Signature

E-2

EX-4.3 30 a2155511zex-4_3.htm EXHIBIT 4.3

Exhibit 4.3

Execution Draft

$165,000,000

Altra Industrial Motion, Inc.

9% Senior Secured Notes due 2011

REGISTRATION RIGHTS AGREEMENT

November 30, 2004

JEFFERIES & COMPANY, INC.

11100 Santa Monica Boulevard

10th Floor

Los Angeles, California 90025

Ladies and Gentlemen:

ALTRA INDUSTRIAL MOTION, INC., a Delaware corporation (the “Company”), is issuing and selling to Jefferies & Company, Inc. (the “Initial Purchaser”), upon the terms set forth in the Purchase Agreement dated November 22, 2004, by and among the Company, the Initial Purchaser and the subsidiary guarantors named therein (the “Purchase Agreement”), $165,000,000 aggregate principal amount of 9% Senior Secured Notes due 2011 issued by the Company (the “Notes”). As an inducement to the Initial Purchaser to enter into the Purchase Agreement, the Company and the subsidiary guarantors listed in the signature pages hereto agree with the Initial Purchaser, for the benefit of the Holders (as defined below) of the Notes (including, without limitation, the Initial Purchaser), as follows:

1. Definitions

Capitalized terms that are used herein without definition and are defined in the Purchase Agreement shall have the respective meanings ascribed to them in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:

Additional Interest: See Section 4(a).

Advice: See Section 6(w).

Agreement: This Registration Rights Agreement, dated as of the Closing Date, between the Company and the Initial Purchaser.

Applicable Period: See Section 2(e).

Business Day: A day that is not a Saturday, a Sunday or a day on which banking institutions in the City of New York are authorized or required by law or executive order to be closed.

Closing Date: November 30, 2004.

Collateral Agreements: Shall have the meaning set forth in the Indenture.

Company: See the introductory paragraph to this Agreement.

Effectiveness Date: The 210^th day after the Issue Date.

Effectiveness Period: See Section 3(a).

Event Date: See Section 4(b).

Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

Exchange Notes: 9% Senior Secured Notes due 2011 of the Company, identical in all material respects to the Notes, including the guarantees endorsed thereon, except for references to series and restrictive legends.

Exchange Offer: See Section 2(a).

Exchange Registration Statement: See Section 2(a).

Filing Date: The 120^th day after the Issue Date.

Holder: Any registered holder of Registrable Notes.

Indemnified Party: See Section 8(c).

Indemnifying Party: See Section 8(c).

Indenture: The Indenture, dated as of the Closing Date, among the Company, the Subsidiary Guarantors and The Bank of New York Trust Company, N.A., as trustee, pursuant to which the Notes are being issued, as amended or supplemented from time to time in accordance with the terms hereof.

Initial Purchaser: See the introductory paragraph to this Agreement.

Initial Shelf Registration: See Section 3(a).

Inspectors: See Section 6(o).

Issue Date: November 30, 2004

Lien: Shall have the meaning set forth in the Indenture.

Losses: See Section 8(a).

NASD: National Association of Securities Dealers, Inc.

Notes: See the introductory paragraph to this Agreement.

Participating Broker-Dealer: See Section 2(e).

Person: An individual, trustee, corporation, partnership, limited liability company, joint stock company, trust, unincorporated association, union, business association, firm, government or agency or political subdivision thereof, or other legal entity.

Private Exchange: See Section 2(f).

Private Exchange Notes: See Section 2(f).

Prospectus: The prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Notes covered by such Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

Purchase Agreement: See the introductory paragraph to this Agreement.

Records: See Section 6(o).

Registrable Notes: (i) Notes, (ii) Private Exchange Notes and (iii) Exchange Notes received in the Exchange Offer, in each case, that may not be sold without restriction under federal or state securities laws.

Registration Statement: Any registration statement of the Company and the Subsidiary Guarantors filed with the SEC under the Securities Act (including, but not limited to, the Exchange Registration Statement, the Shelf Registration and any subsequent Shelf Registration) that covers any of the Registrable Notes pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

Rule 144: Rule 144 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule (other than Rule 144A) or regulation hereafter adopted by the SEC providing for offers and sales of securities made in compliance therewith resulting in offers and sales by subsequent holders that are not affiliates of an issuer or such securities being free of the registration and prospectus delivery requirements of the Securities Act.

Rule 144A: Rule 144A promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule (other than Rule 144) or regulation hereafter adopted by the SEC.

Rule 415: Rule 415 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.

Rule 430A: Rule 430A promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.

SEC: The Securities and Exchange Commission.

Securities: The Notes, the Exchange Notes and the Private Exchange Notes.

Securities Act: The Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

Shelf Notice: See Section 2(j).

Shelf Registration: See Section 3(b).

Subsequent Shelf Registration: See Section 3(b).

Subsidiary Guarantor: Each subsidiary of the Company that guarantees the obligations of the Company under the Notes and the Indenture.

TIA: The Trust Indenture Act of 1939, as amended.

Trustee: The trustee under the Indenture and, if applicable, the trustee under any indenture governing the Exchange Notes and Private Exchange Notes (if any).

Underwritten Registration or Underwritten Offering: A registration in which securities of the Company are sold to an underwriter for reoffering to the public.

2. Exchange Offer

3. Shelf Registration

If a Shelf Notice is delivered pursuant to Section 2(j), then this Section 3 shall apply to all Registrable Notes. Otherwise, upon consummation of the Exchange Offer in accordance with Section 2, the provisions of Section 3 shall apply solely with respect to (i) Notes held by any Holder thereof not permitted to participate in the Exchange Offer, (ii) Notes held by any broker-dealer that acquired such Notes directly from the Company or any of its affiliates and (iii) Exchange Notes that are not freely tradeable as contemplated by Section 2(j)(v) hereof, provided in each case that the relevant Holder has duly notified the Company within six months of the Exchange Offer as required by Section 2(j)(v).

4. Additional Interest

provided, however, that Additional Interest will not accrue under more than one of the foregoing clauses (i), (ii) or (iii) at any one time; provided further, that the maximum Additional Interest rate on the Notes may not exceed at any one time in the aggregate 1.00% per annum; and provided further, that (1) upon the filing of the Exchange Registration Statement or Initial Shelf Registration (in the case of (i) above), (2) upon the effectiveness of the Exchange Registration Statement or Initial Shelf Registration (in the case of (ii) above), or (3) upon the exchange of Exchange Notes for all Notes tendered (in the case of (iii)(A) above), or upon the effectiveness of a Shelf Registration which had ceased to remain effective (in the case of (iii)(B) above), Additional Interest on the Notes as a result of such clause (or the relevant subclause thereof), as the case may be, shall cease to accrue.

5. Hold-Back Agreements

The Company agrees that it will not effect any public or private sale or distribution (including a sale pursuant to Regulation D under the Securities Act) of any securities the same as or similar to those covered by a Registration Statement filed pursuant to Section 2 or 3 hereof (other than Additional Notes (as defined in the Indenture) issued under the Indenture), or any securities convertible into or exchangeable or exercisable for such securities, during the 10 days prior to, and during the 90-day period beginning on, the effective date of any Registration Statement filed pursuant to Sections 2 and 3 hereof unless the Holders of a majority of the aggregate principal amount of the Registrable Notes to be included in such Registration Statement consent, if the managing underwriter thereof (if any) so requests in writing.

6. Registration Procedures

In connection with the filing of any Registration Statement pursuant to Sections 2 or 3 hereof, the Company shall (and shall cause each Subsidiary Guarantor to) effect such

registrations to permit the sale of such securities covered thereby in accordance with the intended method or methods of disposition thereof, and pursuant thereto and in connection with any Registration Statement filed by the Company hereunder, the Company shall (and shall cause each Subsidiary Guarantor to):

7. Registration Expenses

8. Indemnification

The Indemnifying Party shall have the right, exercisable by giving written notice to an Indemnified Party, within 20 Business Days after receipt of written notice from such Indemnified Party of such proceeding, to assume, at its expense, the defense of any such proceeding, provided, that an Indemnified Party shall have the right to employ separate counsel in any such proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or parties unless: (1) the Indemnifying Party has agreed to pay such fees and expenses; or (2) the Indemnifying Party shall have failed promptly to assume the defense of such proceeding or shall have failed to employ counsel reasonably satisfactory to such Indemnified Party; or (3) the named parties to any such proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party or any of its affiliates or controlling persons, and such Indemnified Party shall have been advised by counsel that there may be one or more defenses available to such Indemnified Party that are in addition to, or in conflict with, those defenses available to the Indemnifying Party or such affiliate or controlling person (in which case, if such Indemnified Party notifies the Indemnifying Parties in writing that it elects to employ separate counsel at the expense of the Indemnifying Parties, the Indemnifying Parties shall not have the right to assume the defense and the reasonable fees and expenses of such counsel shall be at the expense of the Indemnifying Party; it being understood, however, that, the Indemnifying Party shall not, in connection with any one such proceeding or separate but substantially similar or related proceedings in the same jurisdiction, arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for such Indemnified Party).

No Indemnifying Party shall be liable for any settlement of any such proceeding effected without its written consent, which shall not be unreasonably withheld, but if settled with its written consent, or if there be a final judgment for the plaintiff in any such proceeding, each Indemnifying Party jointly and severally agrees, subject to the exceptions and limitations set forth above, to indemnify and hold harmless each Indemnified Party from and against any and all Losses by reason of such settlement or judgment. The Indemnifying Party shall not consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to each Indemnified Party of a release, in form and substance reasonably satisfactory to the Indemnified Party, from all liability in respect of such proceeding for which such Indemnified Party would be entitled to indemnification hereunder (whether or not any Indemnified Party is a party thereto).

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation or by other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 8(d), a selling Holder shall not be required to contribute, in the aggregate, any amount in excess of such Holder’s Maximum Contribution Amount. A selling Holder’s “Maximum Contribution Amount” shall equal the excess of (i) the aggregate proceeds received by such Holder pursuant to the sale of such Registrable Notes or Exchange Notes over (ii) the aggregate amount of damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The Holders’ obligations to contribute pursuant to this Section 8(d) are several in proportion to the respective principal amount of the Registrable Securities held by each Holder hereunder and not joint. The Company’s and Subsidiary Guarantors’ obligations to contribute pursuant to this Section 8(d) are joint and several.

The indemnity and contribution agreements contained in this Section 8 are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

9. Rules 144 and 144A

The Company covenants that it shall (a) file the reports required to be filed by it (if so required) under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the written request of any Holder of Registrable Notes, make publicly available other information necessary to permit sales pursuant to Rule 144 and 144A and (b) take such further action as any Holder may reasonably request in writing, all to the extent required from time to time to enable such Holder to sell Registrable Notes without registration under the Securities Act pursuant to the exemptions provided by Rule 144 and Rule 144A. Upon the request of any Holder, the Company shall deliver to such Holder a written statement as to whether it has complied with such information and requirements.

10. Underwritten Registrations of Registrable Notes

If any of the Registrable Notes covered by any Shelf Registration is to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will manage the offering will be selected by the Holders of a majority in aggregate principal amount of such Registrable Notes included in such offering; provided, however, that such investment banker or investment bankers and manager or managers must be reasonably acceptable to the Company.

No Holder of Registrable Notes may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder’s Registrable Notes on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

11. Miscellaneous

Jeffries & Company, Inc.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
Facsimile No.: (310) 575-5165
Attention: Lloyd H. Feller, Esq.

with a copy to:

Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Facsimile No.: (212) 969-2900
Attention: Julie M. Allen, Esq.

Altra Industrial Motion, Inc.
14 Hayward Street
Quincy, Massachusetts 02171

Facsimile No. (617) 689-6202
Attention: Michael L. Hurt

with a copy to:

Weil Gotshal & Manges, LLP
201 Redwood Shores Parkway
Redwood Shores, California 94065
Facsimile No. (650) 802-3100
Attention: Curtis L. Mo, Esq.

All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; five Business Days after being deposited in the United States mail, postage prepaid, if mailed, one Business Day after being deposited in the United States mail, postage prepaid, if mailed; one Business Day after being timely delivered to a next-day air courier guaranteeing overnight delivery; and when receipt is acknowledged by the addressee, if telecopied.

Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee under the Indenture at the address specified in such Indenture.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

	ALTRA INDUSTRIAL MOTION, INC.


	By:
		Name:
		Title:


	AMERICAN ENTERPRISE MPT CORP.


	By:
		Name:
		Title:


	AMERICAN ENTERPRISES MPT HOLDINGS, L.P.


	By:
		Name:
		Title:


	AMERIDRIVES INTERNATIONAL, L.P.


	By:
		Name:
		Title:


	BOSTON GEAR LLC


	By:
		Name:
		Title:

Registration Rights Agreement

	FORMSPRAG LLC


	By:
		Name:
		Title:


	THE KILIAN COMPANY


	By:
		Name:
		Title:


	KILIAN MANUFACTURING CORPORATION


	By:
		Name:
		Title:


	NUTTALL GEAR LLC


	By:
		Name:
		Title:


	WARNER ELECTRIC INTERNATIONAL HOLDING, INC.


	By:
		Name:
		Title:

	WARNER ELECTRIC LLC


	By:
		Name:
		Title:


	WARNER ELECTRIC TECHNOLOGY, LLC


	By:
		Name:
		Title:

ACCEPTED AND AGREED TO:

JEFFERIES & COMPANY, INC.

By:
Name:		M. Brent Stevens
Title:		Executive Vice President

EX-10.1 31 a2155511zex-10_1.htm EXHIBIT 10.1

Exhibit 10.1

AGREEMENT

Between:

American Enterprises MPT, L.P., as Ameridrives International, Erie, PA USA 16502

And

UNITED STEELWORKERS OF AMERICA

Local 3199-10

Effective September 20, 2004

AGREEMENT - PREAMBLE

ARTICLE I - RECOGNITION

EMPLOYEE DEFINITION
UNION RECOGNITION
UNION MEMBERSHIP
UNION POLICY
UNION DUES
UNION TRANSFERS
UNION LIABILITY
SUBCONTRACTS

ARTICLE II - HOURS OF WORK

OPERATIONS, CONTINUOUS/NON-CONTINUOUS
BREAKS
OVERTIME, PAID
OVERTIME, NON-PAID
OVERTIME ASSIGNMENTS

ARTICLE III - HOLIDAYS

HOLIDAYS, RECOGNIZED
HOLIDAYS, PAYMENT
SHUTDOWNS
JURY SERVICE
BEREAVEMENT

ARTICLE IV - VACATIONS

WAGE EARNERS
SCHEDULE
ELIGIBILITY
VACATION PAY
VACATION PAY CALCULATION
VACATION YEAR
VACATION SHUTDOWN
VACATION NOT-TAKEN

ARTICLE V - SENIORITY

DEFINITION
CALCULATION OF CONTINUOUS SERVICE
BREAK IN CONTINUOUS SERVICE
SHIFT PREFERENCE/SHIFT REASSIGNMENT
DECREASE IN WORK FORCE AND RECALLS
BIDDING(INCLUDING TRAINING)
TRAINING PROGRAM
GENERAL INFORMATION
OFFICER SENIORITY
TEMPORARY JOB ASSIGNMENTS AND TEMPORARY TRANSFERS
DISQUALIFICATION

ARTICLE VI - ADJUSTMENT OF GRIEVANCE

PROCEDURE
GENERAL INFORMATION
COMMITTEE MEMBERSHIP
LEAVES FOR UNION REPRESENTATIVES

Page 2 of 27

ARTICLE VII - WAGES

GRADES AND RATES
STARTING RATES
SHIFT PREMIUM
REPORTING PAY
CALL BACK PAY

ARTICLE VIII - JOB EVALUATION

ARTICLE IX - MANAGEMENT

ARTICLE X - SUSPENSIONS AND DISCHARGE

MANAGEMENT RIGHTS
INITIAL SUSPENSION
HEARING
SPECIFIC REVIEWS
PRIOR RECORDS

ARTICLE XI - SAFETY AND HEALTH

ARTICLE XII - INSURANCE

ARTICLE XIII - PENSION

ARTICLE XIV - S.U.B.

ARTICLE XV - MILITARY SERVICE

ARTICLE XVI - BULLETIN BOARDS

ARTICLE XVII - STRIKE AND LOCKOUT

ARTICLE XVIII - TERMINATION

APPENDIX I – JOB CLASSIFICATIONS

Page 3 of 27

1. This agreement, made and entered into this 24th day of October, 2004, effective as of September 20, 2004, by and between the United Steelworkers of America on behalf of Local Union 3199-10, hereinafter referred to as the “Union” and American Enterprises MPT, L.P. or its successors, hereinafter referred to as the “Company”.

2. As used in this Agreement, the term “Company” shall mean and apply only to operations of American Enterprises MPT, L.P., which are located within Erie County of Pennsylvania, and which include and are specifically and directly related to the Mechanical Drives operations, whether presently existing or established through future expansion.

3. Whereas, it is the intent and purpose of the parties hereto that this Agreement will promote and improve industrial and economic relationships between the employees and the Company, and to set forth herein the Basic Agreement covering rates of pay, hours of work and conditions of employment to be observed between the parties hereto.

4. The Company and the Union agree there will be no discrimination against any employee or applicant for employment because of age, sex, race, creed, color, or national origin. Use of masculine pronoun shall apply to both genders.

1. The term “employee” as used in the Agreement, shall not include Foreman, Assistant Foreman, or Supervisor in charge of any classes of labor, Plant Guards or any salaried employees.

2. The Company recognizes the Union as the sole collective bargaining agency for all employees of the Company not exempted under Section 1, and agrees not to restrict the officers in the performance of their duties providing adequate advance notice is given.

3. It is agreed that one of the conditions of employment in the classes of labor covered by this agreement shall be membership in said Union of the United Steelworkers of America, with the provision that when new employees are employed, there is a probationary period of thirty (30) calendar days, after which new employees in such classes will be required to become members of said Union. Employee or employees shall be properly classified in their respective job assignments at the completion of the probation period and the respective grievers so notified.

4. For employees hired on or after 12/14/96, when deemed necessary by supervision on an individual basis, an employee’s probation may be extended for one (1) additional 15-working day period, beginning with a meeting with supervision, the Chief Griever, and the employee. During this period, no union dues will be required, but the employee will be entitled to all other benefits that would normally apply.

5. The employee will not become a member of the Union until the successful completion of his probationary period.

6. It shall further be the policy of the Union to in no way restrict its members in their efforts to improve the quality and quantity of work performed. The Company and Union agree to promote production and a genuine feeling of harmony between both parties to this Agreement.

7. During the term of this agreement, the Company will continue to check off dues, and the initiation fees, each as designated by the International Treasurer of the Union, as membership dues in the Union on the basis of and for the term of individually signed voluntary check off authorized cards heretofore or hereafter submitted

Page 4 of 27

to the Company. The Company shall promptly remit any and all amounts so deducted to the International Treasurer of the Union. All above deductions shall be made weekly and shall be forwarded monthly, as in the past to the International Treasurer of the United Steelworkers of America, P.O. Box 1880, and Pittsburgh, Pennsylvania 15278-1880. Check to be accompanied by a statement showing the part represented by initiation fees and part representing dues, with a list of employees from whom the deductions were made.

8. Employees who have transferred from another local to this local shall not pay initiation fees, and notice shall be given to the Controller by the Financial Secretary of the Union, no later than one (1) week prior to payroll deductions. All new employees claiming to be transferred shall be referred by the Personnel Department to the Financial Secretary of the Union, whose duty it is to decide the date for the commencement of deduction and the amount of the first deduction from such transferees as may be paid up in advance in the preceding local.

9. The Union shall indemnify and save the Company harmless against any and all claims, demands, suits or other forms of liability that shall arise out of or by reason of action taken by the Company in complying with the provisions of this Article.

10. It is the policy and the intent of the Company to use its employees as much as practicable for work on the properties involved, and to contract work out only when the interest of the Company and its employees as a whole are best served by the satisfaction of customers’ needs and as required by sound business considerations.

A. When it is deemed necessary to contract work out, discussion and a good faith effort will be made by both parties to arrive at a mutual understanding as to why the sub-contracting is necessary. It is also the intent of the Company to strive to its fullest effort to maintain a forty (40) hour work week when considering contracting work out and will seek to inform the Union of its sub-contracting needs through the establishment of monthly meetings when necessary. Monthly meetings will be necessary if the Company has reduced the workforce such that the bargaining unit has people on layoff. The above shall not be construed as a guaranteed of hours of work per week. Not dependent on the above, quarterly subcontracting meetings will be held, reviewing past and proposed jobs to be subcontracted on the first Tuesday of the beginning of each quarter.

B. Consistent with the above, one (1) committee will be established consisting of the Union Unit Chair, the Unit Secretary, the respective Grievers, and one (1) chosen by the Unit Chair, and the accountable Management representatives. Any disputes resulting from contracting work out will be grieved starting with the third step of the procedures.

1. Effective as of the date of the Agreement there is established an eight (8) hour day and a forty (40) hour week. This is intended to define the normal hours of work and shall not be construed as a guarantee of hours of work per day or days of work per week. An eight (8) hour day shall consist of eight (8) consecutive hours of labor, plus thirty (30) minutes off without pay for lunch on non-continuous operations. Employees on continuous operations shall be provided with a fifteen (15) minute lunch period. The workweek shall begin on Monday, through five (5) continuous twenty-four (24) hour cycles, each of which shall begin at the employee’s normal starting time.

A. Normal shift schedules at the Pittsburgh Avenue plant shall be:

1) CONTINUOUS OPERATIONS

7:00 AM - 3:00 PM

3:00 PM - 11:00 PM

11:00 PM - 7:00 AM

Page 5 of 27

2) NON-CONTINUOUS OPERATIONS

7:00 AM - 3:30 PM

3:30 PM - 12:00 Midnight

B. Unusual shift schedules maybe instituted by mutual agreement between the Supervisor of the area and the Griever of the area and shall be posted. (It is expressly understood that when this happens, a new twenty-four (24) hour cycle starting time has been established for those specific employee or employees involved.)

C. The established lunch periods as they now exist will remain in effect for the duration of this agreement, unless changed by mutual agreement between the Manager of Manufacturing and the Chief Griever.

2. All employees shall be granted a ten (10) minute mid morning coffee break. All employees shall be granted a five (5) minute wash-up period at the end of their shift.

3. Overtime shall be paid for all hours worked in excess of eight (8) in any one (1) twenty-four (24) hour cycle as defined in Paragraph 1 above, or for hours worked in excess of forty (40) hours in any one (1) week.

A. Time and one half shall be paid for all hours worked on Saturday and Double-time will be paid for all hours worked on Sunday and/or Holidays.

4. An employee shall not be paid both daily and weekly overtime for the same hours worked.

5. Overtime assignments are a necessary requisite to the effective and orderly operations of the Company. Employees scheduled for such assignments are expected to report and perform work as scheduled. However, in the selection of employees to be assigned and scheduled the following procedure will apply:

A. Employees within identical job classifications (Job title and Labor Grade) on the same shifts will share the overtime opportunities as equally as possible starting first with the employees with the most seniority. (This refers to Monday through Friday Overtime.)

B. Within the framework of the job classification on the same shift, employees have the right to refuse the overtime opportunity; but only to the extent that the needs of the Company are meet by others within the job classification on the same shift.

C. Failure on the part of an employee to accept and work the overtime hour’s opportunity afforded to him by the Company will count as overtime hours worked by him for overtime equalization purposes.

D. A rotation list shall be established so necessary overtime not specifically covered in normal job descriptions or in excess of the manpower available will be distributed as fairly as possible with due consideration to required skills, abilities, and physical limitations.

E. Overtime opportunity within a given job classification on the respective shifts will be distributed among the eligible employees as equally as possible on a quarterly basis. In all cases of Saturday and/or Sunday overtime, the twenty-four (24) hour cycle for overtime purposes is set aside in the event that employees work shifts other than those they normally work as further intent to equalize overtime opportunity. Overtime schedules for Saturday and following weekly overtime will be posted whenever possible no later than the end of the shift for Thursdays.

F. Overtime opportunities for weekdays shall be offered separately from overtime opportunities provided during weekends. A surplus in one (1) category may not be used to offset a deficiency in the other.

F. The Company and the Union recognize that perfect equalization is impossible. However, the Company will make a good faith best effort attempt to equalize overtime opportunities as provided above.

Page 6 of 27

1. The holidays recognized as coming under the scope of this Agreement are as follows:

A. Good Friday

B. Memorial Day

C. Independence Day

D. Labor Day

E. Thanksgiving Day

F. The Day following Thanksgiving Day

G. One personal day with twenty-four (24) hours prior notice.

H. And all weekdays falling in the following period:

1) 2001 - December 24 through January 1 (inclusive)

2) 2002 - December 24 through January 1 (inclusive)

3) 2003 - December 24 through January 1 (inclusive)

2. With the exception of the three (3) holiday weeks specified above, holidays falling on Saturday will be celebrated on Friday and there will be no work scheduled on that Saturday, and holidays falling on Sunday will be celebrated on Monday.

3. All contractual holidays worked shall be paid double time at the employee’s earned straight time rate for all hours worked, plus holiday pay. An employee will be paid for a holiday not worked provided he has worked his scheduled working day both preceding and following said holiday, or has been excused for either or both of these working days.

4. Employees who are absent because of illness or accident, which exceeds twelve (12) months, shall not be eligible for holiday pay after such period of illness.

5. Employees requested to work during the shutdown period for inventory purposes will:

A. Receive straight time pay for an eight (8) hour shift per day.

B. For all hours worked in excess of eight (8) hours per day the rate of pay will be in accordance with the overtime provisions of the contract.

C. Employees who work during the Christmas - New Year shutdown may:

1) At their option receive the holiday pay for the shutdown in lieu of days off or

2) Schedule the time off days involved for a later date and receive payment for same as taken.

D. The Company may employ college students and/or use office or supervisory personnel to staff the inventory crews as needed to fulfill its inventory needs provided all bargaining unit employees have been offered the opportunity first.

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6. Any employee who is called for Jury Service or is subpoenaed to appear as a witness in a court shall be excused from work for the days on which he serves, and shall receive for each such day of Jury Service or subpoenaed witness service on which he otherwise would have worked, the difference between eight (8) times straight time hourly rate and the payment he receives for such jury or witness service. The employee will present proof of service and of the amount of pay received therefor.

7. When a death in the immediate family occurs, an employee shall be entitled to up to three (3) days off with pay based on his current hourly rate, if scheduled working days, for attendance of funerals, the third day being the day of the funeral, or the day after the funeral if travel time dictates. Days need not be consecutive. Immediate family is defined as:

•	Spouse	•	Son-in-Law and Daughter-in-Law
•	Children	•	Grandparents
•	Stepson and Stepdaughter	•	Grandchildren
•	Mother and Father	•	Brother-in-Law (paid day of funeral only)
•	Stepmother and Stepfather	•	Sister-in-Law (paid day of funeral only)
•	Mother-in-Law and Father-in-Law (current spouse)	•	Aunt (excused day with no pay)
•	Sisters and Brothers	•	Uncle (excused day with no pay)

1. All actively working employees with one (1) or more years of continuous service with the Company shall be entitled to vacation with pay according to his/her length of service. This language will not be construed to entitle any employee to pro rata vacation or pro rata vacation pay. Employees who do not perform work during a full vacation year shall not be eligible for vacation time or pay.

2.	YEARS OF SERVICE	VACATION

	One but less than three	One Week
	Three but less than five	Two Weeks
	Five but less than ten	Three Weeks
	Ten but less than eighteen	Four weeks
	Eighteen but less than twenty-three	Five Weeks
	Twenty-three or more	Six Weeks

3. Employees who are absent because of illness or accident, which exceeds a twelve (12) month period, shall not be eligible for vacation pay. All vacations will be capped effective 01/01/02 at four weeks for all employees. Any employee who has more than four weeks before 01/01/02 will be grandfathered and allowed to remain at their current vacation level.

4. Vacation pay will be paid in the same payroll week as the vacation was taken unless the vacation is one (1) week or greater, then the vacation will be paid in advance in the payroll period prior to the start of the vacation period.

A. In the case of a holiday falling within an employee’s vacation period, the employee shall receive his holiday pay in lieu of using a vacation day.

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5. The pay for each said week of paid vacation shall consist of not less than forty (40) hours pay not more than forty-eight (48) hours pay, per individual employee. The number of hours between the above forty (40) hour minimum and the above forty-eight (48) hour maximum shall be the average number of hours per week for which each individual employee is compensated in the immediately preceding period January 1st through May 31st. In cases where an employee did not work during said five (5) month period, the last five (5) months worked by such an employee shall be used to determine his hours per week for vacation pay.

6. Vacation pay will be computed on his current straight time hourly earnings at the time vacation is taken.

7. The vacation year is defined as July 1 to June 30. Vacations will be scheduled in advance by May 1 each year, on a seniority basis within the department, which schedule shall be posted.

8. Any shutdown of operations for vacation will be decided and announced—yes or no—on an annual basis no later than March 1 of each year. If yes, the Company will shut down for vacation for up to two (2) weeks each year. Weeks need not be consecutive and will occur between 6/15 and 8/15.

9. Work scheduling in all departments may be scheduled on a mandatory basis during these periods. When production workers are needed during these periods, selection shall be made first by offering work to those who are not entitled to vacation; then, if necessary, by offering the work opportunity to employees in specific job classifications within the departments in which work is required, in order of Company seniority.

10. Vacations scheduled in accordance with paragraph 7 (including shutdown) will be paid as taken in accordance with this Article, however, with the exception of the shutdown, an employee may choose not to schedule any or all of the remainder of weeks due him; these weeks would then not be taken, and he would receive pay for them on either July 1 or December 1 as he may choose.

1. Seniority is defined as the total continuous service of an employee with the Company and is computed from the date of hire as total years, months, and days.

2. Employees hired, past practice notwithstanding, with the same hiring date, will exercise all seniority rights between each other by use of their clock number, which will be assigned to them based on the date and time of their first interview.

3. After a thirty (30) calendar day probation period is over, and employee’s seniority shall begin from the date of his employment.

4. Those employees who are laid off during their probation period, and are recalled within thirty (30) calendar days, will be credited with the calendar days accumulated prior to their layoff toward the thirty (30) day probation period. When the accumulation of days reaches thirty (30), an employee’s seniority shall begin from the date of employment.

5. Continuous service shall be calculated from date of first employment or re-employment following a break in continuous service in accordance with the following provision

6. Termination of Seniority and employment will result when one of the following conditions occur:

A. Quit

B. Discharge for Cause

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C. Failure to return from a leave of absence within the time span stipulated.

D. Absence for four (4) or more consecutive working days without having notified the Company.

E. Failure to report from layoff within five (5) working days after having been notified by registered mail – return receipt requested.

F. Absence from active payroll for more than twenty-four (24) months due to a layoff.

G. Employees who are absent due to compensable disability will retain seniority rights for twenty-four (24) months or until they have achieved Maximum Medical Improvement, whichever is later.

H. Absence due to compensable disability incurred during the course of employment shall not break continuous services, for the period described in paragraph G provided such individual is returned to work within thirty (30) calendar days after final payment of statutory compensation for such disability or after the end of the period used in calculating a lump sum payment.

7. Shift Preference/Shift Reassignment

A. Employees may elect in writing, one (1) time each year, to exercise a shift preference based on seniority within their primary job function. This election must be made by April 15, and will be implemented effective the first (1^st) Monday in May.

B. Temporary shift changes may occur to fill vacancies caused by absenteeism, illness, injury, vacation, leave of absence, or production needs for the duration of the absence or need. In the event that an absence or needs exceeds four (4) weeks, a shift reassignment will be made based upon seniority within the primary job function. For temporary shift changes of four (4) weeks or less, the junior associate on the excess shift will be assigned.

8. Decrease In Work Force And Recalls:

When the workforce is being decreased employees may request to be voluntarily laid off under the following circumstances:

In case of a decrease in the work force, the following steps shall apply:

A. Voluntary Decrease in Work Force and Recalls

1) Employees in the primary job function being reduced shall be permitted to request by seniority a voluntary layoff in place of the junior employee(s) that would be otherwise reduced. Voluntary layoffs shall be for a maximum of thirty (30) calendar days unless extended for up to an additional thirty (30) day period or periods by mutual agreement between the Company and the Union.

2) When employees are recalled from a voluntarily layoff, the recall opportunity will be offered to the senior laid off employee. If the senior employee(s) declines the recall, the junior employee(s) will be required to accept the recall or shall be considered to have resigned.

3) Whenever an employee is exerting Company seniority, as a result of a recall, he will replace the most junior employee on the job and shift chosen.

B. Decrease in Work Force and Recalls

1) The employee with least seniority will be removed from the job and must first choose a job which he can claim using his seniority, skill, and ability.

2) To be considered capable of performing the job, the employee must have had experience or training equal to the requirements for the job. No employee will be denied an opportunity to claim a job in

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Category D. A fair attempt at familiarizing the employee with the job will be made so he receives a fair trial on the job after the employee is considered qualified. The employee exerting seniority must prove his qualifications on the chosen job within ten (10) working days. An employee will not be removed from the job if in the opinion of management and the union the employee’s progress is sufficient.

3) In the event the employee does not successfully qualify under 1) and 2) above, the procedure shall be repeated one (1) additional time on a different job.

4) Failure to successfully claim a job as outlined above will result in the Company placing an employee on a job in Category D.

5) Employees unable to exercise seniority, or to be placed successfully as outlined above will be laid off.

6) Employees refusing to accept such assignments or to exercise seniority for available placement shall be considered as having quit.

7) Whenever an employee is exerting Company seniority, as a result of a cutback, he will replace the most junior employee on the job and shift chosen.

C. Recalls - Whenever there is an increase in workforce, the following steps shall apply:

1) Employees on lay off will be recalled to vacancy given due regard to seniority, skills, and ability.

2) Senior employees on layoff shall be afforded the opportunity to fill open jobs, which they are capable of performing. Open Jobs must be posted at the same time employees on layoff are recalled.

3) Senior employees on layoff status must return to their bid job when recalled on the basis of their seniority or be considered as a quit.

4) Employees laid off, who do not respond within five (5) working days to a.) or b.) below will lose seniority rights, except for reasons acceptable to both the Company and the Union. Copies of record to be given to Unit Secretary:

a.) A telephone call for return to work from the Company within the presence of a Union representative or;

b.) In the event the Company is unable to contact by phone a notice to return to work will be made by registered mail, return receipt requested, which are placed on record.

9. Whenever there is a posted vacancy in the bargaining unit, the job will be awarded in the following manner:

A. The job will be awarded based on the seniority of those employees within the Company giving due regard to skill and ability.

B. Accepted bidders will be restricted from bidding on any job for six (6) calendar months from the date the job is awarded. After that period, employees shall not be limited in their right to bid for posted job vacancies in a job class parallel or higher than their own. Except as provided in the foregoing sentence, an employee shall be limited to one (1) bid in a twelve (12) month period unless the job to which he bid is terminated for any reason, in which case he shall have unrestricted bidding rights.

C. Senior qualified employees in the job in which the vacancy exist shall be assigned, upon request, to the vacant job without posting; same applies to shift preference.

D. Notice of a vacancy shall be posted on the main bulletin board and the union board in the plant for two (2) working days. The job shall be identified by listing the job title, job category, labor grade, base rate, shift, number of employees required and Date and Time of posting and expiration of posting.

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E. Employees desiring to be considered for the vacancy shall sign the bid sheet. Qualified applicants will automatically be awarded the job according to seniority as outlined in step A and B above. All successful bidders must sign an acceptance form at the time the Company notifies them of their successful bid, which shall be not more than five (5) days after the end of the posting period. The results of the bidding shall be posted on the main and union bulletin boards. The successful bidder shall be transferred to the job no later than the first day of the work week following the end of a period or ten (10) days after the date on which he was notified that he was the successful bidder (excluding Saturdays, Sundays, holidays, and vacations). The employee will be given up to a ten (10) working day trial period to prove his qualifications. A fair attempt will be made to familiarize the employee with all aspects of the job during this period. If he fails to qualify, he will return to the job he formerly held. If the bidder decides he does not want the new job (self-disqualification) after it has been awarded and accepted within ten (10) working days, and be returned to the last job held.

F. If a job bid is put on hold and the Company is unable to award it within the prescribed five (5) day period, a memo will be posted identifying the reason for the delay. If the job is not awarded after thirty (30) days, the job will be voided unless the company demonstrates that it is aggressively making an effort to fill the job.

G. An employee going on vacation, short-term sick leave, layoff, or excused absence who wishes to be considered for a particular job which may be posted during his absence, may apply by filling in a form which will be available in the Personnel Office stating the job for which his application should be filed.

1) Absentee job bidders on extended illness or accident will be awarded the job, if qualified. To fill the vacancy, the employee next in line will be awarded the job with the understanding that, if the absentee bidder returns to work he will be removed from the job and go through cutback procedures.

H. The job will be awarded to the next senior qualified bidder on the bid sheet when there is a disqualification within the first ten (10) days of a regular bid, and all training or learner bids within the first training period.

I. Nothing herein shall prevent plant management and the grievance committee from agreeing to permit an employee who, because of a permanent physical disability as certified by the Company medical department, is unable to continue on his then current job or be assigned to a vacant job or to successfully bid on the job without regard to seniority, provided that such employee shall not subsequently be permitted to bid off such job unless the Company medical department certifies that such employee is physically fit.

J. Job bidding, qualification, and training.

In order to provide employment security and job performance opportunity, the Company agrees to a Company Job Training Program that will be reviewed with the union committee on an as needed basis in order to determine and negotiate any necessary changes to meet the needs of the Company, its associates and its customers. Any changes will be implemented based upon mutual agreement

1) Qualified Bid – Job opportunities will be initially posted for internal candidates. To be considered eligible for a job in this category, an associate must:

(a) Have had prior experience in the job without a disqualification, or

(b) Have parallel experience related to the job acceptable by management, or

(c) Have prior completion of specific training for the job in question through the Company sponsored training program or equivalent other training programs.

2) In the event there is no qualified bidder, a qualified learner from the un-qualified bidders list will be next considered.

(a) To be considered eligible for a job in the learner category, an associate must have prior successful completion of specific learner training for the job in question through the Company sponsored learner program, or

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(b) The learner bid will be administered as a training bid except the learner bid will start at A3, B1, or C Finish on the Training program progression chart as dictated by the job bid.

3) In the event that there are no qualified bidders, or qualified learners the Company may recruit external Qualified candidates or the Company may post a training bid.

4) Training Bid - At any time the Company can post a training bid in order to fulfill production needs. The training bid will be administered as follows:

(a) All training opportunities will be posted in the plant. All training bids will indicate Opening (date and time) and Closing (date and time) and minimum qualification requirements.

(b) Associates and outside candidates must possess the minimum qualification requirements of the job to be considered qualified for a Job Training Bid.

(1) In the event there are no qualified internal bidders, the Company may recruit outside candidates for the training position.

(d) Trainees will be restricted from bidding on any job for one (1) calendar year from the date training completed.

(e) Training bids will start the no later than (90) days from the date of award. If the awarded training bid is not started within (90) days of the posting expiration date, it is voided.

(f) The company, in a good faith effort, will attempt to complete or have completed an individual training within (9) months of the start of training. The needs and requirements of the customer always come first.

(g) Every (30) days the trainee will be evaluated by the instructor and supervisor to ensure quality training. If a trainee has started the training bid and fails to demonstrate sufficient progress and/or ability, the trainee can be disqualified, and returned to their last held job.

10. Training Program (Progression Chart)

A. Training periods for each job classification are indicated below. Progression in a lesser time for demonstrated superior learning may be granted at the company’s discretion. Note: Job progressions only apply to training bids and/or new hires.

Classification	Hours	Wages
A5	After 200 Hours	A Rate
A4	After 200 Hours	A Rate less $.50/hour
A3	After 200 Hours	A Rate less $1.00/hour
A2	After 200 Hours	A Rate less $1.50/hour
A1	After 200 Hours	A Rate less $2.00/hour
A Start		A Rate less $2.50/hour

B3	After 200 Hours	B Rate
B2	After 200 Hours	B Rate less $.50/hour
B1	After 200 Hours	B Rate less $1.00/hour
B Start		B Rate less $1.50/hour

C Finish	After 200 Hours	C Rate
C Start		C Rate less $1.00/hour

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11. GENERAL

A. An employee who fails to maintain an average level of productivity for two (2) consecutive weeks will be returned to the last job held as seniority permits. The employee may not bid back to the job from which he was disqualified for a period of one (1) year. Employees during a two (2) consecutive week period who demonstrate that their productivity is increasing shall be afforded additional time as may be mutually agreed upon.

B. In all cases of permanent promotion, transfer, demotion, increase or decrease of workforce, respective grievers and the unit secretary and the employee involved shall be notified in writing at least forty-eight (48) hours before such change.

C. Union members who in the past have transferred to management work, upon termination of the management job, may return to the bargaining unit, provided however, such an employee shall not be returned to the bargaining unit with any more seniority than built up while in the bargaining unit prior to transfer. Any such employee will not have the right to bump except by his accumulated bargaining unit seniority combined with skill and ability, within the same procedure herein outlined. Subsequent to 09/01/71, Union members being promoted to management, who remain in management beyond ninety (90) days then have no bargaining unit seniority.

D. Any employee from management who never held bargaining unit seniority during his tenure with the Company will not have any seniority rights other than to be considered a new employee within the bargaining unit.

E. No foreman or supervisor shall be allowed to do production or maintenance work except for the purpose of instruction. Fabrication of samples, tryout of new machines, or new processes is not considered production work. If a non-bargaining employee performs work in violation of this section and the employee who otherwise would have performed this work can be reasonably identified, the Company shall pay such employee the applicable standard hourly wage rate for the time involved or for two (2) hours, whichever is greater.

F. In case an employee leaves the service of the Company on his own accord, the employee loses his seniority rights, provided however, verifications from the Company must be writing, with a copy to the Unit Secretary immediately on separation.

G. In case of increase or decrease of forces, an effort will be made to operate on a forty (40) hour per week basis, successful and orderly operation of the plant is to govern.

12. The Unit Chair, Unit Secretary, Chief Griever, and grievers, shall for layoff and rehiring purposes only, have the highest seniority rank while holding office.

A. The Unit Chair, and Unit Secretary shall exercise their seniority in the same manner as other employees. At the point of layoff on that job their officer seniority shall take hold.

B. Grievers and Chief Griever shall exercise their seniority in the same manner as other employees in the area of their representation to the point that they must leave the area of representation. Then their Griever’s or Chief Griever’s seniority take hold on that job.

13. Temporary Job Assignments and Temporary Transfers

A. Temporary Job Assignments - Temporary Job assignments of employees may occur to expedite production subject to the following limitations:

1) No one job assignment will exceed Thirty (30) consecutive working days without being posted as an open job except where in the management in review with the Chief Griever demonstrates that production needs require an extension of the temporary job assignment.

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2) No one job assignment exceeding Ten (10) consecutive working days will be permitted in a job class affected by a cutback.

3) No one employee will be used to expedite production in excess of Thirty (30) working days in any one quarter (three month period) except wherein the General Foreman in review with the Chief Griever demonstrates that production needs require and extension of the temporary job assignment.

4) If an employee is assigned to expedite production on his bid job, such assignment will constitute a permanent recall.

5) When job assignments to expedite production are felt to be excessive, the parties shall meet to see if the problem can be alleviated by posting, recall, and/or job evaluation.

B. Temporary Transfers

1) Temporary transfers of employees may occur to fill vacancies caused by absenteeism, illness, injury, vacation, or leave of absence, for the duration of the absence. While not normally subject to job posting, in the event of a known extended absence, or an absence that exceed three (3) weeks that is undetermined, the vacancy must be posted for temporary bid with the understanding that the absent employee upon his return to work shall be returned to his job, title and labor grade if it still exists.

2) An employee transferred from his bid job will return to his bid job when the temporary period of work is completed, if his job is still available.

3) An employee transferred from a job he has claimed through cutback procedures shall be returned to that job when the temporary period of work is completed, if it is still available.

4) An employee transferred to his bid job to fill a vacancy caused by absenteeism, illness, injury or leave of absence, which exceeds fifteen (15) consecutive working days, would be considered as having been permanently recalled. Any such transfer, which does not exceed the fifteen (15) day period, would result in the employee reverting to his previously held job.

C. General

1) If an employee is moved to higher rated job on a temporary basis by management, he will be paid the established rate for the job during the temporary period. In the event that an employee is assigned to a lower class of work on a temporary basis by management, he will retain the rate of his present classification during the temporary period.

2) When an employee is temporarily moved by management for more than Five (5) consecutive work days the Unit Secretary will be issued at the time of notification a written statement as to job title, labor grade, shift, and the proposed duration of the move. If five (5) days or less, verbal notification will be given to the affected grievers.

3) Temporarily held positions are subject to be claimed by senior qualified employees affected by a decrease in workforce. Absences covered by “utility concept jobs” will not be excluded from this language if the absence is beyond a week or not due to vacations.

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14. Disqualification

A. If, in the Company’s opinion, an employee is unable to continue performing his job satisfactorily, the Company may remove him and permit him to use his seniority as if he were affected by a cutback. The Company’s action may be subject to a challenge through the grievance procedure.

B. If, in the employee’s opinion, he is unable to continue performing his job and the Company agrees, the employee will be placed, as his seniority permits, on a job in Category D.

1. Should differences arise between the Company and Union of its members employed by the Company as to the meaning and application of the provisions of this Agreement, an earnest effort shall be made to settle such differences immediately in the following manner:

A. Step (1): Orally, between the aggrieved employee and/or a member of the grievance committee and his immediate supervisor within seventy-two (72) hours of the alleged occurrence. In the event the matter is not settled satisfactorily at this point, then:

B. Step (2): The matter shall be reduced to written form within seventy-two (72) hours and presented to the Director of Personnel who will then present it to the designated Company official who will meet within five (5) working days with the Chief Griever and Shift Griever involved and give a written answer within seventy-two (72) hours following the discussion. In the event the matter is not settled satisfactorily at this point, then:

C. Step (3): The written grievance is referred within five (5) working days for settlement to the respective representative of the National Organization of the Union and the Grievance Committee and members of the Company Negotiating Committee, who will meet within ten (10) calendar days to resolve the grievance.

D. Step (4): In the event this dispute shall not have been satisfactorily settled, the matter shall then be appealed to an impartial arbitrator to be appointed by mutual agreement of the parties hereto. If the Company and Union cannot mutually agree to an arbitrator within ten (10) calendar days, the parties shall submit the matter to the American Arbitration Association for handling in accordance with the rules of that Association. The Company and The Union shall share the fees and expenses incurred through the use of the Association and the arbitrator equally.

2. General:

A. Wherever seventy-two (72) hours is mentioned above, this is exclusive of Saturdays, Sundays, Holidays, and suspension time.

B. When circumstances prevent the meeting and/or the rendering of a reasonable answer within the above times, the parties concerned will be notified of the anticipated delay and the reason therefore. At this point, a mutual agreement to extend the time limit may be reached. The agreement to extend the time limit on grievance steps should be a written memo between Union Grievance Committee Chairman and Personnel Director. In the absence of such agreement, the time limits set forth in the above procedures up to the point of arbitration are equally binding on the company and the Union. Failure by the Company to comply with the time limits set forth; the grievance shall be settled in favor of the Union or employee. Failure of the employee or the Union to comply with the time limits set forth, the grievance shall be settled in favor of the Company.

C. The arbitrator shall have jurisdiction and authority only to interpret, apply or determine compliance with the provisions of this agreement; but the arbitrator shall not have the power to arbitrate provisions or a new agreement or to arbitrate away in whole or in part, any provisions of this agreement.

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D. The decision of the arbitrator made in conformity with the terms of this Agreement shall be final and parties to abide with the award.

3. The Grievance Committee shall consist of not less than three (3) employees, and not more than five (5) employees, designated by the Union, who will be afforded such time off, without pay, as may be required:

A. To attend the regularly scheduled committee meetings, and

B. To attend the meetings pertaining to discharge or other matters which cannot reasonably be delayed until the time of the next regular meeting.

C. Any member of the Grievance Committee shall have the rights to visit departments other than his own at all times for the purposes of transacting the legitimate business of the Grievance committee, after notice to and permission from his department supervisor or his designated representative; same to apply to the supervisor in the department being visited.

4. Leaves for Union Representatives:

A. Employees, not to exceed five (5) elected or appointed by the Union to attend meeting or conventions of the Union, shall upon proper notices be granted the necessary leave of absence without pay to attend such functions.

B. Leaves of absences for the purpose of accepting positions with the International Union and leaves of absence for employees elected to public office for the term of office shall be available to no more than Three (3) employees during any given period of time. Adequate notice of intent to apply for leave shall be afforded local plant management to enable proper provisions to be made to fill the job or jobs to vacated. Leaves of absence shall be for a period not in excess of one (1) year and are subject to renewal each year thereafter.

C. Continuous service shall not be broken by the leave of absence and will continue to accrue. However, throughout the period of leave no monetary benefits are applicable with exception to pension rights. Upon return by the employee or employees, he or they shall be slotted on a job in accordance with seniority, skill and ability, without loss of seniority.

1. There is established a wage scale of rates in accordance with job evaluation set forth below, effective the closest Monday to:

Classification	9/20/04	9/20/05	9/20/06
A	21.16	21.51	21.71
B	19.48	19.83	20.03
C	15.86	16.21	16.41
D	13.63	13.98	14.18
Increase amount	.25	.35	.20

The above numbers represent the increase described above for each year.

2. Starting Rates for all employees, all jobs - The starting rate for any employee (successful bidding applicants and/or new hires) on any job, will be the applicable rate of the job, with the exception of learners under Job Training.

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3. Employees working on second shift shall receive Forty cents ($.40) per hour in addition to their hourly rate. Employee working on third shift shall receive Fifty cents ($.50) per hour in addition to their hourly rate.

4. When employees are instructed to report, and do report, for work at the scheduled starting time, and are prevented from performing services that day by conditions beyond their control, such employees shall be paid for actual time held or a minimum of four (4) hours, except:

A. If they are at home when word is left for them not to report for work.

B. If notice has been posted or given orally on the day before and such employees have worked on the previous day to receive such posted or oral notice.

C. When existing conditions are beyond the Company’s control, due to an act of God, such as power failure, flood, fire, and etc…

5. Any employee who may be recalled to the plant for a specific emergency shall be compensated at a minimum of four (4) hours pay at the applicable overtime rate.

1. The job description and evaluation for each job in effect shall continue in effect unless:

A. Management changes the job content to the extent of one (1) labor grade or more.

B. The job is terminated or not occupied during the period of one (1) year, or,

C. The description and evaluation is changed in accordance with mutual agreement between the Company and the Union. When and if the Company establishes a new job or changes the job content of an existing job to the extent of one (1) labor grade or more, a new job description and evaluation for the new or changed job shall be established in accordance with the following procedure:

1) Management shall develop a description and evaluation of the job in accordance with the program now in effect and review the description with the Union Committee.

2) The proposed description and evaluation will be submitted to the job evaluation committee of the Union (consisting of the Unit Chair, Unit Secretary, Chief Greiver, and the Shift Greiver of the area of representation.) for review and approval.

3) If management and the Job Evaluation Committee are unable to agree upon the description and evaluation of the new or changed job, management shall install the proposed job on evaluated hourly rate. The employee or employees affected or job evaluation committee may at any time within thirty (30) days file a grievance alleging that the job is improperly described and evaluated. Such grievance shall be processed under the Grievance Procedure of this Agreement.

4) In the event management does not develop a new job description and evaluation, the employee or employees affected may, if filed promptly but within six (6) weeks, process a grievance under the Grievance Procedure of this Agreement requesting that a job description and evaluation be developed.

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1. The Management of the Company, and the direction of the working forces, including but not limited to, the right to hire, suspend or discharge for proper cause, or transfer, and the right to hire, suspend or discharge for proper cause, or transfer, and the right to relieve employees from duty because of lack of work or for other legitimate reasons, is vested exclusively in the Company, provided however, this will not be used for the purpose of discrimination against any employee of the Company, subject to the provisions of this Agreement.

2. The Company and the Union agree to cooperate for maximum production. They will work together in suggestions for training employees and/or establishing apprentice courses. Any program so developed shall be negotiated between the Company and the Union.

1. In the exercise of its rights set forth in the Article IX, Management agrees that an employee shall not be pre-emptily discharged, but that in all instances in which Management may conclude that an employee’s conduct may justify suspension or discharge, he shall be first suspended. All disciplinary action will be taken as quickly as possible.

2. Such initial suspension shall be not more than five (5) working days. During this period of initial suspension, the employee may, if he believes that he has been unjustly dealt with, request a hearing and a statement of the offense with management, with members of the Grievance Committee.

3. Within two (2) working days of the suspension, the Unit Secretary of the Union will be given a statement containing the reason or reasons for the suspension including any background information and specifics known at the time of suspension.

4. At such hearings the facts concerning the case shall be made available to both parties. After such hearing or if no such hearing is requested, management may conclude whether the suspension shall be converted into a discharge, or dependent upon the facts of case, that such suspension shall be upheld, revoked, or extended.

5. If the suspension is upheld or revoked, the employee shall be returned to employment. If the suspension is extended or converted into discharge, and the employee protests this decision, he may do so by filing a grievance which shall then be handled in accordance with the procedure of Article VI, Adjustment of Grievance starting at Step (3). However, it is expressly understood that any grievance filed in accord with the provisions of this paragraph, must be filed with the Company within five (5) working days immediately subsequent to the date on which the decision was made to extend the suspension or convert it to discharge.

6. Any and all subsequent reviews pertinent to suspension and/or suspension and discharge cases will be based solely and completely on the facts leading up to and involved with each respective case.

7. The Company will not use any personnel records of previous disciplinary action against the same employee involved where the disciplinary action occurred one (1) year prior to the similar charge.

Page 19 of 27

1. The Company shall continue to make reasonable provisions for the safety and health of its employees at the plant during the hours of their employment. The Company in accordance with the practice now prevailing in the plant shall provide protective devices, wearing apparel and other equipment necessary to properly protect employees from injury. Proper heating and ventilating systems shall be provided where needed.

2. The Company shall furnish to each of its employees, employment and place of employment, which are free from recognized hazards that are causing or likely to cause death or serious physical harm to its employees.

3. The Company Safety Coordinator, working with the Joint Company-Union Safety Committee, shall hold periodic meetings not less than monthly. The function of this committee, shall be to advise with management on matters concerning safety and health of the employees. The advice of the Safety Committee, together with supporting suggestions, recommendations and reasons, shall be submitted to the Director of Personnel for implementation. The Company Safety Coordinator, working with the Joint Company -Union Safety Committee, will see that equipment considered unsafe is repaired and made safe prior to its being used.

4. Accident investigations, when an ambulance has to be called, will be conducted with the area shift grievers present. A copy of all supervisors’ accident Investigations reports will be provided to the Unit Secretary and appropriate Chief Griever.

1. The Company agrees to the following contributory group insurance plan for all employees in the bargaining unit and their dependents for the term of this Agreement.

2. All bargaining unit employees who elect to participate in the group insurance plan will participate in the cost of health care with the following weekly deductions:

A. To offset the cost of healthcare coverage, employees have agreed to apply a portion of their increased yearly compensation to subsidize the amount required from each employee.

B. Effective Jan 1, 2005 employees will pay 20% of the total premium reduced by a subsidy of $44,400.00. The net weekly contribution capped for 2005 will be as follows:

	2005
Single	$	12.15
Parent w/Child(ren)	$	29.77
Husband/Wife	$	32.91
Family	$	37.26

C. Effective Jan. 1, 2006, employees will pay the lesser of 22% of the total premium reduced by a subsidy of $23,088.00 or the weekly rates as set forth below:

	2006
Single	$	18.62
Parent w/Child(ren)	$	45.60
Husband/Wife	$	50.41
Family	$	57.08

D. Effective Jan. 1, 2007, employees will pay the lesser of 22% of the total premium reduced by a subsidy of $30,779.00 or the weekly rates as set forth below:

	2007
Single	$	22.08
Parent w/Child(ren)	$	54.10
Husband/Wife	$	59.80
Family	$	67.71

Page 20 of 27

3. All Employee Contributions to be effective starting 1/1/02 and renewing every 1/1 for the life of the contract and according to act 125 – Pre-tax deductions.

4. Life Insurance – Employee Life insurance benefit is $20,000.00 of which: One-half of the respective above amount includes a Permanent and Total Disability provision and one-half includes a Waiver of Premium Clause.

5. A.D.& D - Same as “Life” above. ($20,000.00)

6. Retiree Life Insurance – Retired Employee life insurance benefit after fifteen (15) years of service, life insurance will be provided by the Company for any employee so retired in the amount of $10,000.00

7. Sickness and Accident – Employee Sickness and Accident benefit is fifty-two (52) weeks duration (1st day accident, 8th day illness) including make up on Workers Compensation to include full coverage of first week. Weekly Benefit Amount as follows:

Benefit Amount		Effective Date
$310 per week		4/01/05
$320 per week		4/01/06
$330 per week		4/01/07

8. S & A will be paid on the next regular pay day after becoming eligible. The employee shall sign over all S & A checks from a Third (3^rd) party insurer for any period the Company has advanced the employee for any S & A Benefits or In the event the S & A claim is denied. The Employee agrees to promptly reimburse the Company for any monies owed and authorizes the Company to deduct amounts owed from any paycheck or other pay owed to the employee.

9. Employee and Dependent Coverage:

A. Active employees may elect employee and dependent coverage under the health insurance plan provided by the company for the duration of this new agreement.

B. With respect to the Hospitalization, Surgical, Major Medical and Dental benefits provided under this program, the Company will supplement the existing programs of health care, as may be needed, in order to maintain benefit quality, and cost effectiveness of the programs. It is the intent of the Company to provide quality health care at lower costs. In that regard, the Company will review the option designed to achieve this objective. The Company will include the Union Committee in these meetings for the purpose of assuring their understanding, support, and agreement. The Company will conduct educational meetings and provide informational materials for employees regarding the benefits of these new programs. All such meetings will take place prior to the implementation of these programs.

C. In the event the Company sees fit to change insurance carries, or to self-insure, with respect to the health and/or dental plans described above, the coverage will remain substantially similar with mutual agreement between the union and the Company.

D. Effective for employees and dependents of employees who were hired on and after 09/01/92, any medical expenses that are incurred due to a condition which was diagnosed or which was the subject of medical advice or treatment within ninety (90) days prior to the employee and/or dependents initial effective date of coverage shall not be eligible for benefits for twelve (12) months following the employee’s and/or dependent’s initial effective date of coverage unless eligible under the HIPPA Law.

E. Dental Program – See the dental handbook for coverages

F. Medical Benefits are outlined in the handbooks.

G. Birthday Rule: Determine primary coverage for insured dependents where both spouses have Dependent Health Care Coverage. The primary coverage will be provided by the employers’ plan of the spouse having the earliest birthday in the year (previously, the employers’ plan of male was considered primary).

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H. Employees employed after 9/1/89 who retire will have their first six (6) months of COBRA coverage paid for by the Company. Employees who retire under disability and normal retirement (age 62) hired prior to 09/01/89 shall have continued coverage after retirement under the Blue Cross/Blue Shield health coverage (excluding Major Medical, prescription drug card, and dental coverages) at company cost for the retiree. Retirees and dependents are not eligible for Select Blue (POS) coverage. Such coverage will continue for the retiree and spouse until the earlier date of Medicare eligibility of the retiree and spouse or death of employee. When the spouse of a living retiree reached Medicare eligibility all coverages on such spouse will terminate at that time but coverage on any eligible dependents will continue until age 19 (to include full time college students to age 25) or death of the retiree if earlier. When the retiree reaches Medicare eligibility, the coverage on the retiree will change to the Blue Cross/Blue Shield “65 Special” coverage. Retirees who retire on or after 09/01/83 at age sixty (60) with at least thirty (30) years of service will receive the same health insurance as that received by normal retirees.

10. The following miscellaneous provisions are applicable and pertinent to the Insurance Program throughout the duration of this Agreement.

A. Occupational Disability: Coverage will continue under the Health, Dental, Vision, Group life, and Accidental Death and Dismemberment Insurance programs throughout the period which the employee is eligible to receive Worker’s Compensation benefits for up to twenty four (24) months or until the employee has reached maximum medical improvement whichever is later. The employer will provide the employer’s portion of the cost of the health care coverage. The employee will be required to remit his portion on a monthly basis to remain eligible for these benefits.

B. In case of a dispute as to liability regarding a Workers’ Compensation claim, the insurance carrier involved shall accept the claim and pay the benefits outlined herein. Should such a claim be determined at a later date to be compensatable under Workers’ Compensation and payment is made, reimbursement will be to said insurance carrier.

C. Non-Occupational Disability: The full insurance program will be kept in force during the period in which the employee receives disability benefits for a period not to exceed fifty-two (52) weeks. If at the end of fifty-two (52) weeks, the employee continues to be disabled, the Group Life Insurance along with the Major Medical coverage will be kept in force. The employer will provide the employer’s portion of the cost of the health care coverage. The employee will be required to remit his portion on a monthly basis to remain eligible for these benefits.

D. Layoff or Leave of Absence: Life Insurance coverage for any employee who is on layoff will be continued at Company cost for six (6) insurance months following the month in which layoff or leave of absence takes place. Thereafter, the employee may continue for an additional eighteen (18) months at a cost of $.60/$1,000.00 if the employee chooses to voluntarily make payment to the Company no later than the fifteenth (15th) day of each month.

E. Layoff Health Benefit.

1) The health benefits (including dental and vision) under this program will be continued for six (6) months for employees with two (2) or more years of continuous service at the date of layoff.

2) The employer will provide the employer’s portion of the cost of the health care coverage. The employee will be required to remit his portion on a monthly basis to remain eligible for these benefits.

3) Thereafter, the employee may continue this coverage for an additional period of eighteen (18) months if he chooses, by paying the monthly premium to the Company no later than the fifteenth of the month.

F. Permanent-Total Disability: If you become permanently and totally disabled for life from any cause and provided that such disability:

1) Occurs prior to age 60.

Page 22 of 27

2) Occurs after you have been continuously insured for at least one (1) year.

3) Prevents you from engaging in any occupation for wage or profit.

4) Has continued for a period of at least six (6) months.

5) Is confirmed periodically by due proof as required by the Company, 50% of the amount for which you are insured will be paid to you in 40 equal monthly installments. In the event of recover, monthly installments will cease.

6) The Group life insurance policy is to contain a clause providing for a waiver of premium in the event an employee becomes totally disabled prior to age sixty (60), payable at death, in addition to any unpaid balance payable under P.T.D. coverage.

7) The amount of life insurance covered under Waiver of Premium shall reduce to $10,000 at normal retirement date.

G. The Company and the Union mutually agree that any employees who apply for and receive Sick and Accident (disability) benefits and are gainfully employed elsewhere during the disability period will automatically be deemed to have quit their jobs at Ameridrives International and will be terminated immediately.

H. The Company and the Union agree that each employee shall be required to sign or obtain signatures to the necessary enrollment cards or other instruments incidental to the group insurance program.

I. Employees returning to active employment with seniority rights will be automatically covered as of the first day of active work. Any employees not actively at work on the effective date of this Agreement shall receive the benefits effective on their first day of return to active work.

J. Insurance will become effective for all employee who are actively at work on the effective date of this program, provided they have competed their thirty (30) days probationary period.

K. New booklets will be prepared and will describe the insurance coverages in reasonable detail, listing covered services, limitations and exclusions, and it is agreed that employees will observe reasonable requirements for filing claims for benefits under the plan. The booklet is to set forth the terms of the plan within the meaning of this Agreement and to the mutual satisfaction of the parties hereto.

L. The administration of said program shall be under the general guidance and supervision of the Company, but the Company agrees to furnish the Union such reports and statistical data as shall be necessary for a reasonable comprehension and understanding of the operation of the program.

M. In the event of individual differences between any employee(s) and the insurance carrier as to the payment of claims, both parties agree to cooperate fully in seeing that the carrier selected fulfills its obligation on payment of claims.

N. All of the above notwithstanding, employee hired on and after 09/01/89 are not eligible for Life Insurance when they retire.

O. Employees, under C.O.B.R.A. may also be eligible to continue medical and dental benefits after coverage terminates. See your group insurance booklet for details.

1. The pension agreement as amended in effect on 08/31/95 shall remain in effect for the duration of this agreement (unless changes are required by law). The following amendments will be effective 09/20/04.

A. The pension multiplier will be increased to $34.00 per year of service for eligible employees.

Page 23 of 27

B. The 1% alternative pension multiplier was frozen at the benefit calculation, for each eligible employee effective on September 20, 2001. Years of credited service for purposes of the 1% alternative pension multiplier will be frozen effective September 20, 2004.

C. As set forth in the pension plan agreement, at retirement, eligible employees shall receive the higher level of benefits provided under the contractual pension multiplier, or the frozen 1% alternative pension multiplier.

1. The existing S.U.B. Plan as amended effective 09/01/86 shall remain in effect.

1. Employees other than temporary employees, who enter the Armed Forces, shall be reinstated upon completion of their first enlistment or subsequent involuntary enlistment and in accordance with the provisions of Selective Service Act as amended.

1. A Separate bulletin board shall be provided at the plant for the posting by Local 3199-10 and members thereof of such notices that have been approved by the Company. This is agreed to with the following understanding:

A. Boards will be continuously reviewed, with old notices removed after a reasonable amount of time.

B. Notices will be of good general taste such as Local 3199-10 business matters, meeting announcement, and “for sale” items.

C. Material posted must be approved and signed by an appropriate Union Officer.

1. There shall be no authorized or sanctioned strike, work stoppage, lockout or other interference with production during the effective term of this Agreement.

1. The agreement of all parties contained in this basic Agreement shall become effective as of 09/20/04 and shall continue in effect to and including midnight 09/19/07

2. Either party may on or before 06/01/07, give notice to the other party of the desire of the party giving such notice to negotiate with respect to the terms and conditions of a new basic agreement.

A. If such notice is given, the parties shall meet within thirty (30) days after 06/01/07 to negotiate with respect to such matter.

B. If either party gives no such notice, the Contract shall extend for one (1) year.

3. Any notice to be given under this Agreement shall be given by registered mail, be completed by and at the time of mailings; and, if by the Company, be addressed to the United Steelworkers of America, District 10, 1945 Lincoln Highway, North Versailles, Pennsylvania 15137-2798, and if the by Union to the Company, be addressed to American Enterprises MPT, L.P., 1802 Pittsburgh Avenue, Erie, Pennsylvania 16502. Either party may, by like written notice, change the address to which the registered mail notice is to be given.

Page 24 of 27

Signed, this 24th Day of October, 2004

AMERICAN ENTERPRISES MPT, L.P.

/s/	David P. Zietlow
/s/	Jason Trippe
/s/	Daniel R. Harvey

UNITED STEELWORKERS OF AMERICA

/s/	William Wolfram
/s/	Gene Mook
/s/	Raymond Brown
/s/	Jeffrey Manczka
/s/	Glenn Diley
/s/	Timothy Hart
/s/	Michael Monocello

Page 25 of 27

1. The Classifications will be defined using the definitions as provided in the previous proposal as follows:

A. Class A=Machine Operator - Includes cellular manufacturing jobs or jobs that require more than (3) machines to be run simultaneously. A cell is defined as a series of machines or processes, grouped together by work sequence, whose primary (defined as greater than 80%) function is to transform raw materials into finished goods. Class A will:

1) Alters multiple features of a part

2) Flows parts (one machine to the next w/o queues until operations are complete.)

3) Have the Ability to produce on multiple machines simultaneously.

4) Self Scheduling

— or —

5) Must run more than (3) machines simultaneously. (Group technology)

6) This class currently consists of but is not limited to:

(a) Gear line

(b) Maintenance A (Electrician Current)

(d) Re-bore cell

(e) Welder/Diaphragm Cell

(f) HS Spacer Cell

(g) HS Diaphragm cell

(h) HS Component cell

(i) HS Sub Assembly cell

(j) HS Assembly cell

(k) Large Standard Cell

B. Class B=Jobs which transform raw material into finished parts or goods (non-cellular).

1) This class currently consists of but is not limited to:

(a) Keyseater

(b) Slotter/Slotter Grinder

(d) Manual Engine Lathe

(e) Turret Lathes

(f) Welder

(g) K & T Mill

(h) Radial Drill/Toyoda

(i) Grinding

(j) Heavy Assembly/Lapping

(k) Vertical Turret Lathe

(l) Induction Hardening

(m) Cleereman Drill/Mills

(n) 2 – Axis CNC’s

(o) 4 – Axis CNC’s

(p) Maintenance B (Mechanic/Millwright)

(q) Chief Inspector

Page 26 of 27

C. Class C=Jobs that directly support the Class A and B jobs.

1) This class currently consists of but is not limited to:

(a) Inspector

(b) Packing

(d) Carpenter

(e) Tool Crib

(f) Storeroom

(g) Receiver

D. Class D=Jobs which support the shop.

1) This class currently consists of but is not limited to:

(a) Labor Crew

(b) Oiler

E. Maintenance - Due to the nature of this work, the definitions of classes A or B will be different – although the pay scale remains the same.

1) Maintenance A – The ability to fix a machine mechanically and electronically and do building maintenance. Person must be a qualified electrician.

2) Maintenance B – The ability to mechanically fix a machine and do building maintenance.

F. Rules - In each of the above job classes, there are still primary job functions for individuals. For instance, the turret lathe operator is in class B, but still owns the job titled “Turret Lathe”. The operator will be required to operate the machine, and perform any tasks that are within the same or lower class (Class B, C, and D in this case), at the Class B wage. For instance, this person may de-burr his part (De-burr), inspect it (Inspector), move it to the next operation (Jitney), and must also take care of his machine, for example, oil, and/or grease machines as needed. (Oiler.)

G. It will be understood that the primary functions of the “C” and “D” classification will be a secondary function of the job classifications of “A” and “B”.

Page 27 of 27

EX-10.2 32 a2155511zex-10_2.htm EXHIBIT 10.2

Exhibit 10.2

Formsprag Clutch and UAW Local 155 – Labor Agreement Expires 12:01 a.m. 12/6/2004

Article 1 -AGREEMENT

1.1 This Agreement is entered into on this December 3, 2001 between Warner Electric Inc., Formsprag Clutch Plant, hereinafter referred to as the “Company” and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, UAW Local No. 155, hereinafter referred to as the “Union.”

1.2 The parties to this Agreement, in consideration of their mutual promises and agreements, herein set forth in consideration of their desire to stabilize employment, eliminate strikes, boycotts, lockouts, and a discontinuance of work, and of their desire of securing closer cooperation between the Company, the Union, and the Employees represented by it, promise and agree that:

2.1 The Union is recognized as the sole and exclusive representative for the purpose of collective bargaining for all production, and maintenance, employees employed at the Company’s 23601 Hoover Road, Warren, Michigan plant, including janitors and truck drivers, but excluding engineers, office clerical employees, professional employees, guards and supervisors as defined in the National Labor Relations Act, as amended. Former practices and oral and written understandings which may have been in effect prior to this Agreement shall not constitute part of this Agreement.

3.1 The parties recognize that the management of the Company has the responsibility for conducting the affairs of the Company in the interests of its owners, its employees and its customers. The parties agree that in order to carry out this responsibility, management retains the sole right, subject only to the express provisions of this Agreement, to manage the business and to direct the working forces of the Company. The Company’s right to manage its business includes, but is not limited to: the right to hire, promote, demote, transfer, assign and direct associates; to discipline, suspend, and discharge for just cause; to layoff employees due to lack of work or other legitimate reasons; to make and enforce reasonable plant rules of conduct and regulations not inconsistent with the provisions of this Agreement, to enforce company rules equally and fairly; to increase or decrease the working force; to determine the number of products to be manufactured and the methods, processes and materials to be used; to determine the need for and layout of machinery and equipment; to determine quality and establish reasonable work standards; to determine the number of hours per day or week operations shall be carried out; to establish and change work schedules and assignments; to subcontract, discontinue or relocate all or any portion of the operations now or hereafter carried on at the present facility; to schedule hours of work, including overtime, to determine job content and to maintain safety, efficiency and order in the plant.

4.1 The Company agrees that so long as this Agreement is in effect there shall be no lockout. The Union, its officers, agents, members, and employees covered by this Agreement agree that so long as the Agreement is in effect, there shall be no strikes, partial or complete, sit-downs,

slowdowns, stoppages or cessation of work, including actions of a sympathy nature, boycotts, or any unlawful acts of any kind that interfere with the Company’s operation or the production or sale of its products. The Company shall have the right to discipline (including discharge) any employee who instigates, participates in, or gives leadership to an unauthorized strike in violation of this Agreement.

4.2 The Arbitrator shall have power to review the reasonableness of penalties imposed under this Section.

Article 5 - UNION SHOP

5.1 Each employee covered by this Agreement shall be or become a member of the Union as a condition of employment not later than the 30th consecutive calendar day following the effective date of this Agreement, or not later than the 30th consecutive calendar day following the beginning of his employment, whichever is later. Each such employee, as a condition of continued employment, shall remain a member of the Union in good standing to the extent provided in the Union’s International Constitution and as authorized by the Labor Management Relations Act of 1947, or as that Act has been or is amended. The Union shall notify the Company in writing of any employee who fails to become or remain a member of the Union as required above. If after receipt of such notice by the Company the employee does not become a member or remain a member of the Union within five (5) days (whichever is applicable) he shall be terminated.

5.2 The Union shall indemnify and save the Company harmless against any and all claims, demands, suits or other forms of liability that shall arise out of or by reason of action taken in reliance upon the information furnished to the Company by the Union for the purpose of complying with Section 5.1, above.

6.1 Upon receipt of the authorization of check-off of dues, the Company will deduct from wages earned including jury duty pay, bereavement pay, and paid absence allowance, and turn over to the proper Union official, initiation fees, reinstatement fees and/or current monthly dues of such members of the Union or Agency Shop fees of such employees as individually and voluntarily certify in writing that they authorize such deduction for the term of the contract.

6.2 The initial deduction from the pay of an employee signing a new authorization shall be from the second pay period following the date of his authorization.

6.3 The deduction of Union dues shall be made from wages earned during the first full pay period that an employee works in a calendar month and in a manner agreed upon with the International Union. The Financial Secretary-Treasurer, or other duly authorized Union official of each local unit will notify the Company in writing on Union stationery, of the amount of dues each month by each employee who has authorized a deduction and this amount will remain in effect until changed by a similar written authority. In case of an error, proper adjustment will be made by the Union with the employee.

6.4 All dues deducted will be remitted to the Financial Secretary-Treasurer or other such duly authorized Union official of each local unit not later than the twenty-fifth day of the calendar month

in which such deductions are made or as may be otherwise agreed. The Company will furnish the aforesaid Union official of the local union monthly a record of the employees from whose wages deductions have been made together with the amounts of such deductions.

6.5 The Company will also furnish the Union a record of those employees who have signed authorization cards but who have been removed from the unit payroll since the last check-off date and for whom no dues have been collected.

6.6 In the event the Union wants the Company to collect more than one month’s regular dues from an employee it will furnish the Company with written notification listing each employee and the amount to be collected.

6.7 The Company shall not be liable to the International Union or its locals by reason of the requirements of this article for the remittance or payment of any sum other than that constituting actual deductions made from employee wages.

6.8 The following wording will be used on the check-off authorization.

Date

I hereby assign Local Union No. , International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW), from any wages earned or to be earned by me as your employee while engaged in employment within the Bargaining Unit, such sums as the Financial Officer of said Local Unit No. 155 may certify as due and owing from me as initiation fees, reinstatement fees and membership dues as may be established from time to time by said local union in accordance with the Constitution of the International Union, UAW. I authorize and direct you to deduct such amounts from my pay and to remit same to the Union at such times and in such manner as may be agreed upon between you and the Union at any time while this authorization is in effect.

This assignment, authorization and direction shall be irrevocable for the period of one (1) year from the date of delivery hereof to you or until the termination of the collective agreement between the Company and the Union which is in force at the time of delivery of this authorization, whichever occurs sooner; and I agree and direct that this assignment, authorization and direction shall be automatically renewed and shall be irrevocable for successive periods of one (1) year each or for the period of each succeeding applicable collective agreement between the Company and the Union, whichever shall be shorter, unless written notice is given by me to the Company and the Union not more than twenty (20) days and not less than ten (10) days prior to the expiration of each period of one (1) year, or of each applicable collective agreement between the Company and the Union whichever occurs sooner.

This authorization is made pursuant to the provisions of Section 302(c) of the Labor Management Relations Act of 1947 and otherwise.

6.9 It is agreed that an employee who retires will be provided the opportunity to complete a retirees dues check-off authorization.

7.1 Seniority shall be by Classification Seniority within Occupational Groups. The Occupational groups shall be as follows:

Group I

101	Cell Operator - Primary (*)
102	Tool Room Machine Operator
103	Turning/Mill/Drill
104	Grind
105	Heat Treat Operator and Maintenance
106	Maintenance
107	Inspection
108	Auto Cutoff & Notch
109	Sprag Grind

Group II

201	Cell Operator - Secondary (*)
202	Aircraft Clutch Rebuild
203	Grotnes & Punch Press
204	Magnaflux
205	Tumble/Deburr/Bench
206	Assembly/Rebuild

Group III

301	Cell Operator - Support
302	Ship/Receive/Stock Handle /Truck Driver
303	Tool Crib/Stock Room
304	Clutch Test/Parts Clean
305	Janitor

7.2 A CELL is defined as technology consisting of one or more operations during the manufacturing process of the same component in an equipment layout sequentially linking one or more like or unlike machines or operations.

7.3 CELL OPERATOR-PRIMARY - A Primary Cell Operator shall be qualified to perform a Group 1 classification operation in a cell and any other operation in such cell as assigned.

7.4 CELL OPERATOR-SECONDARY - A Secondary Cell Operator shall be qualified to perform a Group 2 classification operation in a cell and any other equivalent or support operations in such cell as assigned.

7.5 CELL OPERATOR-SUPPORT - A Support Cell Operator shall be qualified to perform Group 3 operations in a cell as assigned.

7.6 SENIORITY OF CELL OPERATORS - ( A) Seniority begins in a Cell Operator classification as of the date the operator enters the cell (Job Bid) (B) Seniority continues concurrently in the last classification.

7.7 FILLING OF POSTED CELL VACANCIES - “Qualified” Cell Operator posting shall be by plant seniority of all those who have qualified at Formsprag in at least one of the classification jobs included in the cell (and who have not waived recall rights to such classification), ranking first all of those individuals with previous qualification in a job from the top job group in the cell, and next ranking the individuals from the next lower job group in the cell (if any), and finally ranking those in the next and lowest job group in the cell (if any). “Trainee” Cell Operator posting shall be by plant seniority following the normal procedures in Local Article 8.

7.8 RATES FOR CELL OPERATORS - Rates for Cell Operators shall be equal to the highest rated job assigned to such operator in the cell.

7.9 OVERTIME EOUALIZATION OF CELL OPERATORS - Cell Operators will be equalized within their own specific cell.

7.10 WORK FORCE REDUCTION/LAYOFF – When there is a reduction of the working force or a readjustment of the work force, the following procedure shall be observed in the following order:

1. Notification to the Union, in writing twenty-four (24) hours in advance.

2. Probationary employees in the affected classification shall be laid off first.

3. If additional layoffs are necessary in the classification, the employee with the least classification seniority shall return to his last previous classification provided he has previously attained seniority in such classification and provided there is an employee with less classification seniority in the previous classification. For purposes of this paragraph only, where an employee has in excess of two (2) years seniority in his previous classification, that seniority will be adjusted to equal his plant seniority and, as a result, he will bump the junior employee in point of hire date in that previous classification.

4. When an employee has no previous classification and is laid off from his present classification, he may take a voluntary layoff or shall be permitted to “bump” the junior employee in point of hiring date in his present Group, except that if the lowest employee is in a higher base rate classification he will bump the next lowest employee (if any) in his present Group, and then the next lowest rated Groups provided he is capable of performing the remaining available work in such classification.

5. Following the above steps, the youngest employee in point of date of hire in the remaining Group will be laid off and considered an inactive employee. Employees will be expected to complete their day’s work in a normal manner after receiving layoff notice.

7.11 When a readjustment of the work force is necessary for a period in excess of one (1) week and a layoff does not result, reductions in a classification will be by classification seniority, and the

same procedure as provided above will be followed except that instead of layoff, the employee remaining without an assignment will be placed on the available work.

7.12 An employee who is reassigned to a previous classification shall receive the corresponding or appropriate number-of-months rate on Schedule 2000.

7.13 No Employee shall be permitted to exercise their seniority to bump into a higher base rate job.

7.14 A seniority employee who has gone into other classifications due to a readjustment of the work force and/ or layoff will return to his/her previous classifications when recalled. However, as an exception to the above an employee working out of a classification for a period in excess of six months, may, if recalled, remain in his current job and relinquish classification seniority in his previous classification. Additionally, an employee laid off to a lower classification who subsequently bids up to a classification between the original classification and the one from which he was laid off, may relinquish classification seniority at any time when recalled.

7.15 Only the lowest seniority employee, or employees, in a classification should be laid off.

7.16 Seniority Employees shall be recalled in reverse order of the layoff provisions before any new employees are hired.

7.17 TEMPORARY ASSIGNMENT – Employees may be transferred from one classification to another provided they are capable of doing the job and do not infringe on the seniority rights of the employees regularly employed in the classification to which such transfer is made. Employees on layoff in the affected classification need not be recalled unless there is a reasonable likelihood of one (1) week’s work. Abuses of this provision shall be subject to the Grievance Procedure. The Company will notify the Union of all temporary assignments as soon as possible. A “double” temporary assignment where an employee is temporarily assigned out of his classification and another employee is temporarily assigned in doing the first employee’s job is prohibited, unless there is advance agreement between Company and Union. If employees do not volunteer for temporary assignment, the employee in the affected classification with the least seniority, who is qualified to do the work required, shall be temporarily assigned. For all temporary assignments scheduled, a Union representative will be notified of the temporary assignment prior to the change in assignment, except in emergencies when the Union will be notified as soon as possible. If a job is vacant due to sick leave, the Company will post the job after 45 days, unless the Company and Union agree otherwise.

7.18 Employees working in a lower classification, except by reason of seniority displacement, shall continue to receive their own rate. Employees working in a higher rate classification for thirty (30) minutes or more shall continue to receive their regular rate for all time worked during the temporary assignment, or the corresponding numbers-of-months rate on Schedule 2000, whichever is greater. As an exception to the above, employees reduced from a classification and then subsequently reassigned to work in such classification for one (1) hour or more, shall receive the corresponding or appropriate number-of-months rate on Schedule 2000.

7.19 It may be necessary, from time to time, for day people to work nights, or vice versa, in order to maintain an efficient balance of shifts, or temporarily to schedule additional shift operations in certain classifications. If employees do not volunteer to change shifts, the employee in the affected classification with the least seniority, who is qualified to do the work required, shall be temporarily required to change shifts or forfeit his/her seniority.

7.20 SHIFT PREFERENCE - When a vacancy occurs on any shift by reasons of any available opening, except for a position to be filled by a trainee, the employee with the most classification seniority on another shift shall be given preference for transfer to other shifts within his classification.

1. Employees shall be eligible for transfer under this procedure after having completed their probationary period.

2. Employees will be permitted to bump another employee working on another shift in the same classification provided he- has more classification seniority. Individuals may exercise seniority for shift preference at any time with two weeks written notice. Providing that they have not exercised a shift bump in the prior six months, and providing that no shift bumps are allowed during the month of December. All shift bumps will take place on Monday unless the Company agrees otherwise.

3. The above shift bump will not apply to trainees with less than six (6) months in such classification

7.21 MISCELLANEOUS -

1. The Company and Union agree that cross training is desirable, as time permits.

2. The Company shall keep a true seniority list and a rate list of all employees having seniority rights, which shall be open to the inspection of the Bargaining Committee at all reasonable times. A copy of the seniority list shall be given to the Chief Bargaining Committeeman once every six (6) months for posting.

4. The Company agrees to submit to Local 155 on July 1^st and January 1^st of each year the following data: The name of each employee covered by this Agreement, his occupation and current hourly rate (including cost-of-living but excluding night shift premium) and the payroll period from which the data is taken. Rates of individuals that have been adjusted by other than a general or automatic increase during the previous six (6) months will be identified by an asterisk..

7.22 PROBATIONARY EMPLOYEES - A new employee will be considered probationary for a period of sixty (60) calendar days from date of last hire.- There will be no responsibility for the rehiring or recalling of a probationary employee who is discharged or laid off during his probationary period. If requested, the Company will discuss the discharge or layoff with the Union.

7.23 A new employee hired as a temporary or vacation replacement will be considered as a probationary employee for the first one hundred twenty (120) days of his employment.

7.24 Immediately following his probationary period, an employee will become a seniority employee and will be entered on the seniority list of the Bargaining Unit and will rank for seniority from the date and hour of his last hire. A probationary employee will not have seniority.

7.25 TRAINEES FOR EXCLUDED POSITIONS - The Company will have the right to exempt from all seniority and wage requirements an employee enrolled for the purpose of training and experience with the expectation that such trainee ultimately will be assigned to permanent employment other than that covered by this Agreement. The total of such trainees may not exceed two (2) in number at any one time, nor may any trainee displace an employee covered by this Agreement. The Bargaining Committee shall be notified before the training begins as to the names of the trainees and when they will begin training.

7.26 TEMPORARY EXCLUDED EMPLOYEES - The Company may select a temporary supervisor without regard to seniority for a period not to exceed forty-five (45) calendar days within a calendar year and will notify the Union in writing of the effective date of such temporary assignment. An extension of such period may be granted by mutual agreement. Where necessary, the parties may agree to more than one forty-five (45) calendar-day period in a calendar year. Such employee will not be excluded from the Bargaining Unit, and at the termination of temporary duty he will be reinstated to the job he had prior to the temporary assignment. Stewards, Committeemen, and members of the Executive Board shall be prohibited from accepting a position of temporary supervisor.

7.27 EXCLUDED EMPLOYEES

1. For an employee promoted to an excluded status, a three (3) month period will be established beginning with the effective date of his promotion. Should he return to the Bargaining Unit on or before the end of the three (3) month period he will do so with accumulated seniority. An excluded employee who does not return to the Bargaining Unit on or before the end of the three (3) month period will forfeit all Bargaining Unit seniority and will have no right to return to the Bargaining Unit except as a new hire.

2. An employee who has previously been promoted to an excluded status and returned to the Bargaining Unit with accumulated seniority, will forfeit all seniority with any subsequent promotion to an excluded status and will have no right to return to the Bargaining Unit except as a new hire.

2. An employee with Bargaining Unit seniority who transfers to an excluded status in a facility other than the facility in which he holds seniority will forfeit all such seniority effective with his transfer.

7.28 EXCLUDED PERSONNEL WORKING - Production and maintenance work shall not be performed by supervisors or by any other persons excluded from the bargaining unit, except for the purpose of performing work involving the following situations:

1. The instruction or training of employees.

2. The performance of necessary work when production difficulties are encountered on a job, but such work will not displace a member of the bargaining unit. Further, when such work is done, a member of the bargaining unit will stand by for instructional purposes.

3. The performance of research work or work of an experimental nature, or work involving special mechanical training.

4. The development of new processes.

7.29 SENIORITY DATE - Seniority records on file with the Company on the effective date of the signing of this Agreement will establish the seniority date of each employee. Seniority lists and recall lists shall be available at all times and be kept up to date.

7.30 LOSS OF SENIORITY - An employee will lose his seniority:

1. If he quits.

2. If he is discharged for just cause and the discharge is not reversed through the Grievance Procedure.

3. If he has been laid off and has less than ten (10) years seniority at the time of layoff, he will lose seniority when the layoff period is equal to the seniority he had at time of layoff. For those with at least ten (10) years of service, seniority will expire after ten (10) years.

4. If he has been unable to work due to a medical leave of absence and has less than ten (10) years seniority at the time the leave begins, he will lose seniority when the leave of absence period is equal to the seniority he had at the time the leave began. For those with at least ten (10) years of service, seniority will expire after ten (10) years.

5. If he has been on a workers compensation leave of absence and has less than ten (10) years seniority at the time the leave begins, he will lose seniority when the leave of absence period is equal to the seniority he had at the time the leave began. For those with at least ten (10) years of service, seniority will expire after ten (10) years.

6. Failure to call in for three (3) consecutive work days will be considered as having voluntarily quit, unless such failure to call in is for good and sufficient reasons.

7. If he fails to have his leave of absence renewed by an extension in writing before three (3) calendar days have elapsed after his leave has expired, unless such failure to secure extension of leave was for good and sufficient reason.

8. If he has been laid off and is recalled to work but fails to report for work within five (5) working days from the date of signing the certified or registered letter receipt or telegram receipt, unless the Company agrees to extend this period or he will lose his seniority if the registered letter or telegram is returned as undeliverable from the last known Company address.

9. If he accepts employment elsewhere during a leave of absence unless otherwise agreed to between the Company and the Union.

10. On the effective date of his retirement. If an employee retired for reasons stated herein, and lost seniority in accordance with this section, and is rehired, such employee will have the status of a new employee and without seniority, and he shall not acquire or accumulate any seniority thereafter, except for the purpose of applying the provisions governing Holiday Pay and Vacation Pay.

8.1 SCHEDULE

1. It is recognized that to operate the plant below a forty-hour week is not desirable and therefore the Company and Union agree that if the Company’s work dictates that it is necessary to schedule the work week for any plant, department or classification below forty hours, the Company may do so for not over six weeks in any calendar year (holiday weeks excluded) unless agreement is reached with the Union for an extension of this time.

2. For the purpose of defining the weekly payroll period an employee’s work week will begin on calendar Monday at the regular starting time of the shift to which the employee is assigned, except for those employees whose regular work week begins on calendar Sunday night, in which case their regular work week will begin at their regular starting time on calendar Sunday night.

8.2 OVERTIME

1. Straight time is paid for:

a. The first eight (8) hours of work performed on Monday through Friday.

2. Time and one-half is paid for:

a. The first three (3) hours of work performed over eight (8) hours Monday through Friday.

b. Work performed for the first eight (8) hours on Saturday.

3. Double time is paid for:

a. Work performed over eleven (11) hours Monday through Friday.

b. Work performed over eight (8) hours on Saturday.

c. Work performed on Sunday.

d. Work performed on any of the paid holidays.

8.3 Although overtime work is not compulsory, the Union will not restrict overtime in any manner, and employees will cooperate when requested by the Management to perform overtime work. Individual refusal to work overtime (but not concerted refusal) will not be subject to disciplinary action.

8.4 An employee who accepts an overtime assignment on a Saturday or Sunday, and who fails to report for the assigned overtime, will be considered an absentee under the plant rules or absentee control procedure -. Overtime and premium rates of pay will not be pyramided.

8.5 Every effort will be made to arrange job assignments so that overtime may be equalized within sixteen (16) hours among employees in a classification, on the shift to which overtime becomes available. Individuals on nonstandard shift hours will be equalized together with their classification on the standard shift which contains the majority of their regular working hours. A uniform record system shall be maintained. The Company will make every effort to equalize between shifts. The employee with the lowest number of overtime hours in a classification on the shift involved shall be asked first to work overtime, provided the employee is able to perform the work assigned. A uniform record system shall be maintained. The Company will make every effort to equalize between shifts.

8.6 When possible, the Company will provide twenty-four (24) hour notification to cancel already scheduled overtime.

8.7 The Union will be notified on Thursday for Saturday scheduled overtime and on Friday for Sunday scheduled overtime. For all overtime scheduled, a Union representative will be notified of the overtime prior to employee solicitation, except in emergencies when the Union will be notified as soon as possible.

8.8 The Company will provide for at least one (1) Union representative on assignments for overtime hours on all shifts. When a Committeeman’s regular job is needed on such overtime, he will be called in as the Union representative. If his regular job is not scheduled to work, he will be permitted to work on another job scheduled provided he is capable of performing such work as determined by the Plant Superintendent. In lieu of this procedure, the Union may appoint an alternate representative for the overtime in question.

8.9 Effective with the signing of the Labor Agreement, the following uniform record system will be utilized in all departments:

1. The Company shall maintain an overtime chart, by classification, on each shift covering overtime worked in or out of an employee’s classification. The chart shall be open for inspection to the Bargaining Committee, and shall be reviewed quarterly between the Bargaining Committee and the Company

2. The Company will record overtime hours by calendar year.

3. Overtime offered to an employee and declined will be charged as overtime worked.

4. Overtime solicitation missed by an employee due to his absence from work will be charged as overtime worked.

5. Overtime missed by an employee where he has accepted the overtime shall be charged as overtime worked.

6. New seniority employees in a classification will begin to equalize overtime as of the date of permanent transfer to the new classification and shall take the amount then on record for the highest employee in the new classification.

7. Probationary employees will begin to equalize overtime in a classification upon completion of their probationary period, and shall take the amount then on record for the highest employee in the new classification.

8. Overtime for purposes herein shall mean all overtime made available beyond the hours the classification is scheduled.

8.10 REPORTING AND CALL-IN PAY - An employee called to work and not retained or an employee reporting for work on any scheduled day on his regularly scheduled shift without having previously notified not to report, and not retained, will receive his regular hourly rate for four (4) hours, and shall receive shift premium and premium pay on premium days. The Company may require the employee to work at a job other than his regular classification during this four (4) hour period. Alternatively, the employee may elect to leave after the call-in work is completed and the company will pay the greater of two (2) hours or actual time worked. Additionally, minimum emergency warehouse call-in pay for shipping or delivery employees is two (2) hours.

9.1 Bidding, and assignment to vacant or new jobs shall be based on seniority. Such a vacancy shall be posted for a period of three (3) working days during which time all active employees may indicate their desire to be considered by signing the posting provided they have been in their current classification for a period of six (6) months or more at the time of the posting. Seniority employees with less than six (6) months following their initial plant hire date will be eligible to bid for posted jobs, provided they are on the seniority list and provided they meet other contractual requirements.

9.2 This procedure shall not prohibit the Company from hiring from the outside after discussion with the Union when employees capable of performing the necessary jobs are not available.

9.3 If an employee accepts a bid and then elects to return to their former job during probation in the new classification, they will be prohibited from bidding on any other job for a period of six months from the date they gave up the bid.

9.4 A probation period of sixty (60) calendar days shall apply from the date the job bid is awarded.

9.5 Any employee who is transferred to a classification because of his physical condition as evidenced by a medical certificate shall not be precluded from returning to his regular classification as soon as the Company doctor certifies he is able to return to that regular classification.

9.6 The Company reserves the option of posting for a qualified person in the following classifications: Cell Operators, Tool Room Machine Operator, Heat Treat Operator and Maintenance, and Maintenance. All other job bids will be awarded on Plant seniority.

9.7 TRAINING SCHEDULE - For all promotions, those employees not yet at maximum rate on Schedule 2000 will advance to the corresponding number-of-months rate for the new job and continue progressing on the chart from that point in the new classification. However, employees at maximum position or one increase away from maximum position on Schedule 2000 in their new classification on a bid up will receive their old rate for six months at which time they will be moved to maximum in their new classification.

9.8 Permanent changes in wage rates will be made effective only at the beginning of a pay period following the date as determined on Schedule 2000.

Article 10 - REPRESENTATION

10.1 Employees shall be represented by a Bargaining Committee of no more than three (3) members. The Bargaining Committee shall be selected from a group of nominees on the seniority list, excluding employees laid off in excess of one (1) year, chosen pursuant to Local Union by-laws.

10.2 An agreement reached between the Management and the Bargaining Committee is binding on all workers affected and cannot be changed by an individual.

10.3 If there are employees on the night shift or shifts, they will be represented by an elected Night Steward who must be able to perform the work required. Such Night Steward shall be compensated for necessary time spent adjusting grievances in accordance with the first and second steps of the Grievance Procedure.

10.4 One (1) Committeeman to be designated “Chief Bargaining Committeeman” will be the last laid off when the work force is reduced, provided the Company has work available which he is capable of performing and he is available for such work. If the Chief bargaining Committeeman does not qualify under the above rule, the Union may designate another employee who has been assigned to such work to represent the employees for that period.

10.5 Members of the Bargaining Committee shall be compensated during regular working hours for necessary time spent adjusting grievances, contract negotiations, including meetings with the Company. AIl Committeemen will be permitted to leave their work after reporting to their respective supervisor. It is further agreed that such Committeemen shall give the Company an accurate accounting of time lost adjusting grievances in the same manner as the job records are kept.

10.6 The Chief Bargaining Committeeman shall head the seniority list for the plant and shall work upon the day shift, provided he is capable of doing the work available. The two (2) other

members of the Bargaining Committee shall head the seniority list for their respective groups, provided they are capable of doing the work available. Committeemen shall be returned to their regular standing on seniority upon termination of service on the Committee. Special seniority privileges provided for committeemen, officers and stewards apply in all cases, except recall, overtime, upgrading, vacation, and job bidding. In the event of second or third shift operations, the shift Steward shall be the last laid off and the first recalled, provided he is capable of performing the available work.

10.7 LISTING OF UNION OFFICERS - Upon the signing of this Agreement and thereafter as changes occur the International Union will notify the Company of the names of the International Representatives it is to negotiate with and the Union will furnish the plant with a list of Union or Unit officers, their Executive Committee, their Bargaining Committee, and their stewards.

10.8 BARGAINING COMMITTEE ROOM - The Bargaining Committee will be permitted to leave the Company premises to go to Local 155 offices on Union business or to meetings and receive payment for such time at straight time rate when an official request from the Local Union President is received.

10.9 FURNISHING OF CONTRACTS - The Company will furnish each employee with a copy of this Agreement .

10.10 International and Local Union Representatives other than employees of the Company shall be permitted to enter the plant if advance notice has been given to the Human Resource Department and by registering under the regular plant admission procedure. Union Representatives who are employees of the Company shall be permitted access to the premises on a shift other than their own if notice is given to the Human Resource Department or if such department is not open, by registering under the regular plant admission procedure.

10.11 UNION LEAVE OF ABSENCE - An employee appointed or elected to a full or part-time position in the International Union, United Automobile, Aerospace, Agricultural Implement Workers of America, or a Local or Unit of a Local covered by this Agreement, or any other office in the UAW will apply for and be given a leave of absence without loss of seniority until the termination of such office.

11.1 As used in this Agreement, the term “grievance” shall mean any misunderstanding, difference, or dispute between the Company and the Union, or one or more of the employees represented by the Union arising out of this Agreement, or any supplemental agreements thereto, or concerning or relating to the interpretation and application thereof and filed subsequent to the effective date of this Agreement.

11.2 This Grievance Procedure is divided into four levels. The Bargaining Committee may write and sign a grievance in behalf of an employee or group of employees. If the issue raised is not appropriate for resolution at the first or second level, the grievance may be referred by the Bargaining Committee directly to the 3rd level.

11.3 If, after the employee and his immediate supervisor have discussed the complaint, the matter is not resolved to the satisfaction of the employee, it may be considered a grievance and then the employee will be allowed to review his/her complaint with his/her Committeeperson without delay.

11.4 FIRST LEVEL - The grievance shall be discussed between the employee, the employee’s immediate supervisor and a Union representative. If the grievance is not resolved, it shall be reduced to writing within two (2) working days, signed by the grievant, and submitted to the immediate supervisor for transmission to the Production Manager.

11.5 SECOND LEVEL - The Production Manager will, within two (2) working days of its receipt, unless otherwise agreed to, arrange a conference on the matter between himself, the immediate supervisor, the Chief Bargaining Committeeman and one other member of the Bargaining Committee for day shift grievances. A conference on night shift grievances will be arranged in the same manner between the Production Manager, the immediate supervisor, Chief Bargaining Committeeman, and the night shift Steward. The Production Manager will give a written answer to the grievance and return it to the Chief Bargaining Committeeman within twenty-four (24) hours after the conference unless otherwise agreed.

11.6 THIRD LEVEL - If a satisfactory adjustment is not reached at the 2^nd level conference, the matter will, within five (5) working days after receipt of the written answer, be taken up at a meeting between the full bargaining committee and the management representative(s). The Union and the Company may have outside representatives present at this meeting.

11.7 FOURTH LEVEL– ARBITRATION - If a grievance remains unsettled after the Third Level answer by the designated representative of the Company, it may at any time within fourteen (14) days be referred to arbitration by the Union..

11.8 If at any level of the Grievance Procedure the grievance is not referred to the next level, within the time limits set forth, it will be considered settled upon the terms of the last answer. By mutual consent, time limits at any level of the Grievance Procedure may be extended.

11.9 Any disciplinary action against an employee not previously removed from the employee’s record shall become invalid after a one year period from the date the discipline was issued.

11.10 ARBITRATION RULES

1. The party seeking arbitration shall within the time limits specified above request a panel of Arbitrators from the American Arbitration Association. Such panel will include nine (9) Arbitrators who will all be members of the National Academy of Arbitrators and who have been active Arbitrators in the private sector for at least ten (10) consecutive years from the date the panel is requested. The Union and Company will each have one (1) preemptory challenge of a submitted panel.

2. The Union and Company will first attempt to mutually agree upon a selection from the panel. Should no agreement be reached, the Union and Company shall, in turn, strike

an arbitrator’s name until only one name remains. A single coin toss shall determine whether the Union or Company will make the first strike.

3. The non-prevailing party shall pay the cost of the Arbitrator’s services and expenses. In the event of a split decision, the Arbitrator shall make as part of his/her decision, a ruling as to how the cost of his/her services shall be apportioned. All other expenses, including but not limited to wages of the participants, witness fees, attorney’s fees or cost of exhibits will be borne by the party who incurred the expense.

4. It shall be the duty of the Arbitrator within thirty (30) days after the oral hearing is concluded to issue his/her decision in writing and to furnish a copy thereof to each of the parties. His/her decision shall be final and binding upon the parties.

5. The Union and the Company will make available for the Arbitrator’s inspection and examination such records and data which he may deem necessary to inspect or examine in order to decide the issue. In deciding a case, it shall be the function of the Arbitrator to interpret the Agreement and all Supplemental Agreements thereto and to decide whether or not there has been a violation thereof. He shall have no right to change, add to, subtract from, or modify any of the terms of this Agreement or any Supplemental Agreements thereto or to establish or change any wage rates except for newly created classifications.

11.11 TIME LIMIT FOR RETROACTIVITY - The Company will not be required to pay any claims for monies which accrue more than ninety (90) days before the date of delivering the written grievance to the first supervisor provided in the Grievance Procedure. In all cases where back wages are awarded, deduction will be made of all outside wages and/or monetary benefits including Unemployment compensation.

11.12 NOTICE OF DISCHARGES AND DISCIPLINARY LAYOFFS - Written notice of all discharges and disciplinary layoffs will be given to the Bargaining Committee before such action is to become effective. However, written notice of violation of the Attendance Program will be given to the Bargaining Committee twenty-four (24) hours before such action is to become effective. In the absence of a written grievance within seven (7) calendar days on any of these notices, the action of the Company will be considered final.

11.13 GRIEVANCE MEETINGS - The Human Resource Manager and/or designated, authorized representatives of the Company will meet regularly with the Bargaining Committee of the Unit each week if one or more grievances or problems remain unsettled, and both parties shall make every effort to effect just and speedy settlement of every complaint or grievance. When an emergency arises on a matter that cannot be handled at the regular weekly grievance meeting, the emergency shall be taken up at a special meeting agreed to by the Bargaining Committee and the Company. Meetings under this section shall be held during the regular working hours.

11.14 EMPLOYEES IN GRIEVANCE MEETINGS

1. The Committee, upon due notice to the management, may be accompanied to meetings with the management by the Department Committeeman or Steward, upon the request of

the Local Union Committee. If the Company concurs in the attendance of such an employee it shall pay him, but if the Union requests his presence without Company concurrence the Union shall pay him.

2. It is understood that only interested parties will appear at the grievance meetings since any other arrangement would merely retard the ability to settle the grievance.

3. When the Union desires to have present a witness or witnesses other than the Department Committeeman or Steward, they shall notify the Human Resource Manager, in writing, in advance of the grievance meetings, of the names of the proposed witnesses. If the Human Resource Manager makes no objection to the proposed witnesses they may be present and be paid by the Company for the time spent at the meeting during their scheduled working hours. If the Human Resource Manager takes objection to the presence of any of the witnesses, he shall notify the Union of his objection, but upon such notice of objection, the Union may present the witnesses but such witnesses shall be paid for by the Union. Such employees will be paid the rate in accordance with the local plant custom.

Article 12 – Subcontracting

12.1 The Company will continue the present practices on sub contracting. In the event of a layoff the Company will meet with the Union and discuss outside contracting with the objective of returning to a full employment level. In the event an employee is assigned to work out of classification continuously for a period of two weeks, the Company and Union will meet to discuss the situation as to the effect that outside contracting may have had, or will have on such situations, and attempt to remedy the circumstances.

13.1 When a new job is created, the Company will set up a new classification and rate covering the job in question and notify the Bargaining Committee of the classification and rate it has established.

13.2 The new classification and rate will be considered temporary for a period of thirty (30) calendar days following the date of notification to the Bargaining Committee. During this period, but not thereafter, the Bargaining Committee may request the Company to negotiate a different rate for the classification. The negotiated rate, if higher than the temporary rate, shall be applied retroactively to the date of the establishment of the temporary classification and rate unless otherwise mutually agreed. If no request has been made by the Union to negotiate the rate within the thirty (30)day period, or if within sixty (60) days from the date of notification to the Bargaining Committee no grievance is filed concerning the temporary classification and rate, the temporary classification and rate shall become permanent.

13.3 If a grievance is filed on the temporary classification and rate the grievance shall be handled according to the Grievance Procedure outlined in this contract. If the grievance is referred to the Arbitrator, he will be empowered to determine the proper classification and/or rate for the new job, using as a basis of comparison other jobs in the plant where the dispute exists, taking into

consideration the effort and/or skill required of the employee on the new job. This paragraph may not be interpreted that a dispute on a production standard is to be referred to arbitration without specific agreement by the parties in writing.

14.1 Employees must possess the tools of the trade.

14.2 During inventory shutdowns, employees who are not assigned to their normal jobs, will be given first opportunity to take inventory by seniority (length of service). If sufficient employees do not volunteer, then employees with least amount of plant seniority will be required to work.

14.3 The rates of pay are fixed for the life of this Agreement and the Parties will not be required to bargain under the claim of intra-plant or inter-plant inequities, or upon any other basis whatsoever, for increases in rates of pay or other benefits, fringes, or otherwise. The classifications and rates are set forth in Schedule 2000.

14.4 The Company and the Union each agrees that the other shall not be obligated to bargain collectively with respect to any subject or matter specifically referred to or covered in this Agreement, or with respect to any subject or matter not specifically referred to or covered by this Agreement.

14.5 Employees will be paid during their regular working hours as per present practice.

14.6 Upon presentation of a properly completed sickness and accident (S&A) claim form to the Human Resources Department, the Company will provide a short term loan (upon request) until the S&A payments begin.

14.7 It is the responsibility of the employee to maintain their current address and telephone number on file with the company.

14.8 Employees have the option of being paid by automatic deposit into the checking or savings account of their choice, or receiving a conventional paycheck.

14.9 The Company and Union agree that all employees have a responsibility to share knowledge as a part of their job.

14.10 The Company and Union will discuss in detail during the life of the Agreement regarding ways to improve productivity, with the goal of reducing set-up times, eliminating scrap, and increasing general plant efficiency.

14.11 RECORDING OF EMPLOYMENT STATUS - A record will be kept of any action where a change is made in the employment status of an employee and in each such case the Company will furnish a copy to the Bargaining Committee and to the employee.

14.12 CHANGE OF ADDRESS - An employee will notify the Human Resource Department of any change in address and telephone number in person, by certified or registered mail, telegram, or mailgram, or by an authority countersigned by the affected employee, and will receive verification of such notification on a Company form. The extent of the Company’s liability is to rely

upon the last address reported to the Company. The Bargaining Committee will be given a copy of each change of address. When a recall is necessary the Company shall notify the employee by certified or registered mail. Telephone, telegram, or mailgram may be used but in such cases a certified or registered letter will be used to confirm

14.13 UNCLAIMED WAGES - Upon request by the financial officer of the Local Union, the Company will furnish at least once a year the names, last known address and the amount of unclaimed wages due to such individuals.

14.14 BULLETIN BOARDS - The Company will furnish bulletin boards for the use of the Union who may post notices which have been approved by the Bargaining Committee. Such notices shall be signed by the Chairman or Secretary of the Bargaining Committee and shall have a date for posting and a date for removal.

14.15 WORK RULES - The- Bargaining Committee will receive one week’s advance notice of new rules or changes in existing rules. Any protest over the new rule will be handled through the grievance procedure.

15.1 The Company has pledged and the Union has agreed to cooperate in any and all efforts to ensure equal employment opportunity. It is understood that the word he or she as used throughout this Agreement will designate an employee.

Article 16 – VACATION

16.1 The qualifying vacation year shall be from July 1^st to June 30^th .. Only employees on the seniority list on the last day in June are entitled to vacation pay.

16.2 For the purposes of this article only, an employee whose seniority falls on the first day of the month immediately following the completion of a full year of service in the bargaining unit, shall receive credit for vacation purposes for such full year of service.

16.3 Vacation will be computed on the basis of seniority on the last day of June as follows:

1. Six months and under one year: 1½% of gross earnings during the qualifying vacation year.

2. One year and under three years: 5% of gross earnings during the qualifying vacation year.

3. Three years and under five years: 6% of gross earnings during the qualifying vacation year.

4. Five years and under fifteen years: 7% of gross earnings during the qualifying vacation year.

5. Fifteen years and over: 8% of gross earnings during the qualifying vacation year.

6. In addition to the above, eligible employees will receive an additional 2/5% of gross earnings for each year of service over twenty years up to a maximum of an additional 2% of gross earnings for twenty-five years of service or more. These employees will receive vacation pay as follows:

7. Twenty-one Years and Under Twenty-two: 8-2/5% of gross earnings during the qualifying vacation year.

8. Twenty-two Years and Under Twenty-three: 8-4/5% of gross earnings during the qualifying vacation year.

9. Twenty-three Years and Under Twenty-four: 9-1/5% of gross earnings during the qualifying vacation year.

10. Twenty-four Years and Under Twenty-five: 9-3/5% of gross earnings during the qualifying vacation year.

11. Twenty-five Years and Over: 10% of gross earnings during the qualifying vacation year.

12. This additional vacation pay over 8% of gross earnings is for pay purposes only and is not to be equated to additional vacation time off.

16.4 Vacation pay will be paid to an employee who retires pursuant to the Pension Agreement made between the parties for the vacation year in which such employee retires. Any accumulated vacation pay will be paid as soon as practical after the effective date of retirement. Vacation pay will be paid to the estate of a deceased employee.

16.5 Employees may elect to receive their vacation pay in one check to be received by July 15, or in four quarterly payments to be received by July 15, October 15, January 15, and April 15. Employees interested in the quarterly payment option must request it by June 15 and may not change their election after that date. Those who do not request the quarterly option by June 15 will be paid out in full by July 15. No interest will be paid on monies held back for those employees requesting the quarterly payment option.

16.6 For the purpose of determining available time off, the following procedures will apply:

1. If an employee has worked for the Company more than six (6) months prior to July 1^st of the vacation year, and less than five (5) years total, he will be granted 6-2/3 hours vacation time off for each month worked for the Company since July 1st of the previous year.

2. Employees who have more than five (5) years seniority with the Company prior to July 1st of the vacation year, will be granted 8-2/3 hours vacation time off for each month worked for the Company since July 1st of the previous year.

3. Employees who have more than ten (10) years seniority with the Company prior to July 1st of the vacation year, will be granted 10 hours vacation time off for each month worked for the Company since July 1st of the previous year.

4. Employees who have more than fifteen (15) years seniority with the Company prior to July 1st of the vacation year, will be granted 12-2/3 hours vacation time off for each month worked for the Company since July 1st of the previous year.

5. Employees who have more than twenty (20) years seniority with the Company prior to July 1st of the vacation year, will be granted 15 hours vacation time off for each month worked for the Company since July 1st of the previous year.

6. A month worked is any calendar month during which the employee works at least one half (1/2) the work days of such month. Work is defined as time spent on the job and shall include weeks during which employees are absent receiving weekly disability benefits pursuant to Supplement B of the Master Agreement up to a maximum of 52 weeks.

16.7 MAXIMUM VACATION TIME OFF PROVIDED FULL ENTITLEMENT IS EARNED:

SENIORITY As of June 30th		VACATION TIME OFF For Year Starting July 1st

6-Months		10 days
5-Years		13 days
10-Years		15 days
15-Years		19 days
20-Years		23 days*

* indicates rounding up since vacations are taken only in full day increments.

16.8 EXTRA FIVE DAY UNPAID VACATION BLOCK - Employees with at least fifteen (15) years of seniority prior to the start of the vacation year will be allowed to take five (5) extra unpaid vacation days during the year, provided that (a) they must be used as a full week block of five consecutive days, and (B) they cannot be requested until all paid vacation has been used.

16.9 The Company reserves the right to schedule vacation time off, provided there shall be no discrimination and seniority will be a factor. Employees submitting vacation request for the next vacation year prior to May 15 will be given preference on the basis of classification seniority. For vacation requests made after May 15, the originally scheduled vacation takes precedence over seniority. Vacation time off requests must be in eight (8) hour increments. The intent of the above is that as many as possible schedule vacation time off before May 15 and those that do shall have preference by seniority; those that schedule later than May 15 shall not be allowed to use seniority as a means of bumping those who schedule before May 15.

16.10 Vacation shutdowns will be announced prior to May 1 of any year scheduled.

16.11 All vacation time off requests must be submitted by the end of the regular shift time the scheduled work day prior to the start of the desired vacation, except that five days of employee vacation time off will be designated as “short notice vacation time off days.” These short notice time off vacation days may be requested no later than the starting time of the scheduled shift on the day of the vacation, provided that no short notice vacation time off days may be requested on any of the last five regularly scheduled working days of any calendar month, or the day prior to any paid holiday, or any of the days scheduled for annual plant inventory. Employees calling in for short notice vacation time off days prior to the shift start must either speak directly with a supervisor, or leave a clear message including their name, department, and exactly what day(s) are requested on the supervisor’s voice mail.

Article 17 – PAID HOLIDAYS

17.1 An employee with seniority will be paid for the following holidays:

1. First Year Of Contract (14 Holidays)

Monday, December 24, 2001	Christmas Eve
Tuesday, December 25, 2001	Christmas Day
Wednesday, December 26, 2001	Shutdown Day #1 *
Thursday, December 27, 2001	Shutdown Day #2 *
Friday, December 28, 2001	Shutdown Day #3 *
Monday, December 31, 2001	New Years Eve
Tuesday, January 1, 2002	New Years Day
Friday, March 29, 2002	Good Friday
Monday, May 27, 2002	Memorial Day Observed
Thursday, July 4, 2002	Independence Day
Monday, September 2, 2002	Labor Day
Thursday, November 28, 2002	Thanksgiving
Friday, November 29, 2002	Day After Thanksgiving
Floating Holiday	Requested 2 days in advance, as arranged with supervision

2. Second Year of Contract (14 Holidays)
Tuesday, December 24, 2002	Christmas Eve
Wednesday, December 25, 2002	Christmas Day
Thursday, December 26, 2002	Shutdown Day #1 *
Friday, December 27, 2002	Shutdown Day #2 *
Monday, December 30, 2002	Shutdown Day #3 *
Tuesday, December 31, 2002	New Years Eve
Wednesday, January 1, 2003	New Years Day
Friday, April 18, 2003	Good Friday
Monday, May 26, 2003	Memorial Day Observed
Friday, July 4, 2003	Independence Day
Monday, September 1, 2003	Labor Day
Thursday, November 27, 2003	Thanksgiving

Friday, November 28, 2003	Day After Thanksgiving
Floating Holiday	Requested 2 days in advance, as arranged with supervision

3. Third Year of Contract (14 Holidays)
Wednesday, December 24, 2003	Christmas Eve
Thursday, December 25, 2003	Christmas Day
Friday, December 26, 2003	Shutdown Day #1 *
Monday, December 29, 2003	Shutdown Day #2 *
Tuesday, December 30, 2003	Shutdown Day #3 *
Wednesday, December 31, 2003	New Years Eve
Thursday, January 1, 2004	New Years Day
Friday, April 9, 2004	Good Friday
Monday, May 31, 2004	Memorial Day Observed
Monday, July 5, 2004	Independence Day Observed (In Lieu of Sunday)
Monday, September 6, 2004	Labor Day
Thursday, November 25, 2004	Thanksgiving Day
Friday, November 26, 2004	Day After Thanksgiving
Floating Holiday	Requested 2 days in advance, as arranged with supervision

* Note: Shutdown Days 1, 2, and 3 are subject to rules of special scheduling.

17.2 Employees who qualify under the provisions set forth in this Article will be paid eight (8) hours straight-time pay exclusive of night shift and overtime premiums for each such holiday. In the case of an incentive worker, the employee’s average rate exclusive of night shift and overtime premium for the week in which the holiday falls will be used. For holidays which comprise the Christmas Holiday Period, the incentive worker’s average rate exclusive of night shift and overtime premium for the last full week immediately preceding the shutdown period will be used.

17.3 HOLIDAY ELIGIBILITY REGULATIONS WHICH APPLY ONLY TO PAID HOLIDAYS OTHER THAN THE CHRISTMAS HOLIDAY PERIOD

1. An employee must work at least twenty-three and one-half (23½) hours during a work week in which a holiday falls (fifteen and one half (15½) hours in a week in which two (2) holidays are celebrated during the regular five (5) day work week.

2. Regular working hours during a holiday week excluding the paid holiday itself, in which the plant is shut down will be credited toward fulfilling the twenty-three and one-half (23½) hour requisite in determining eligibility for holiday pay, or: seniority employees on layoff or approved leave of absence when the holiday occurs who return to work following the holiday but during the week in which the holiday falls shall receive pay for such holiday.

3. Notwithstanding the provisions above, seniority employees who have been laid off but who worked in the work week in which the holiday falls, or the work week prior to the week in which the holiday falls, shall receive pay for such holiday.

17.4 HOLIDAY ELIGIBILITY REGULATIONS WHICH APPLY ONLY TO THE CHRISTMAS HOLIDAY PERIOD

1. An employee on approved Personal Leave of Absence or an employee on an Illness Leave of Absence, who is cleared by his doctor to return to work during the Christmas holiday period, shall be eligible for paid holidays for which he was available for work, providing he works his first scheduled work day following the holiday period.

2. Seniority employees on layoff during the Christmas Holiday Period, but who worked in the work week in which the Christmas Holiday Period begins, or in the first, second, third or fourth work week prior to the week in which the Holiday Period begins, will receive holiday pay for each of the holidays in the Holiday Period, provided they work on their last scheduled work day.

3. An employee on layoff during the Christmas holiday period who is scheduled to return to work during the week in which the holiday period ends shall be eligible for paid holidays which fall in such week providing he works his first scheduled work day in such week.

4. The twenty-three and one half (23½) hours of work requirement does not apply to the Christmas holiday periods.

5. Employees must work the last scheduled work day in the week immediately preceding the shutdown period and the first scheduled work day in the week immediately following the shutdown period. An employee will be expected to work his entire scheduled shift on these two days. Time not at work due to emergency or due to causes beyond the control of the employee may merit consideration at the discretion of the Company.

6. A seniority employee absent without approval of his supervisor on either the last scheduled working day prior to or the next scheduled working day after a Christmas holiday period, shall be ineligible for pay for two (2) of the holidays in the Christmas holiday period, but shall, if otherwise eligible, receive pay for the remaining holidays in the Christmas holiday period. The two (2) days of ineligibility are designated to be the two (2) days closest to the day in which the employee was absent.

7. If an employee is scheduled for and accepts an assignment to work on a Saturday or Sunday immediately prior to a day of holiday such assignment shall be considered to be his last scheduled work day.

8. The parties to this Agreement recommend the exchange of paid holidays, on a voluntary local basis, in those cases where some work has to be performed during the Christmas holiday period.

9. The requirement that an employee work the first scheduled work day in the week immediately following the holiday period shall not apply to an employee who retires with a January 1 effective date.

17.5 CHRISTMAS HOLIDAY PERIOD

1. In order for employees to have maximum time off during the Christmas holiday period, employees will be called in to work only in emergencies on the following days which are not paid holidays under this Agreement:

Saturday, December 29, 2001

Saturday, December 28, 2002

Sunday, December 29, 2002

Saturday, December 27, 2003

Sunday, December 28, 2003

2. An employee shall not be disqualified for holiday pay if he does not accept work on such days. This statement does not apply to employees on necessary continuous seven day operations.

3. It is the purpose of the Holiday Pay provisions of this Agreement to enable eligible employees to enjoy the specified holidays with full straight-time pay. If, with respect to a week included in the Christmas holiday period an employee supplements his Holiday Pay by claiming and receiving an unemployment compensation benefit, or claims and receives waiting period credit, to which he would not have been entitled if his Holiday Pay had been treated as remuneration for the week, the employee shall be obligated to pay to the Corporation the lesser of the following amounts: (A) an amount equal to his Holiday Pay for the week in question, or (B) an amount equal to either the unemployment compensation paid to him for such week or the unemployment compensation which would have been paid to him for such week if it had not been a waiting period. The Corporation will deduct from earnings subsequently due and payable the amount which the employee is obligated to pay as provided above.

17.6 HOLIDAY ELIGIBILITY REGULATIONS WHICH APPLY TO BOTH THE CHRISTMAS HOLIDAY PERIOD AND TO OTHER PAID HOLIDAYS

1. An employee must have seniority as of the date of the holiday.

2. Only emergency crews will be worked on a holiday unless otherwise agreed prior to a holiday. An employee working on a holiday will be paid holiday pay under this section and in addition will be paid double time for hours worked on the Holiday. Notwithstanding the provisions above, an employee scheduled to work and accepting a work assignment on any of the listed holidays but failing to report for and to perform work will not receive pay for the holiday.

3. When an employee is eligible for holiday pay and also for a Weekly Disability Benefit for the same day, the Disability Benefit less any applicable Workers’ Compensation Benefit will be paid and the excess of holiday pay over the Disability Benefit or

Workers’ Compensation Benefit, whichever is greater, will be paid as soon as practicable in the form of make-up holiday pay.

4. In the event a holiday falls within an employee’s approved vacation period, he shall be paid for that holiday in addition to his vacation pay.

5. Approved time off for jury duty service, short-term military service and funeral leave will be considered as hours worked for holiday pay eligibility purposes.

6. Notwithstanding the provisions above, seniority employees who have gone on an approved leave of absence during the work week prior to, or during the work week in which the holiday falls, shall receive pay for such holiday.

17.7 SPECIAL CHRISTMAS HOLIDAY PROCEDURES – The following will apply to up to three holidays that fall between Christmas and New Years Eve, provided the Company posts a tentative work crew roster by December 10^th:

1. Employees will be voluntarily solicited by classification to perform necessary work during the holiday period.

2. Employees working during this period shall be given the option to receive either double time pay or straight time pay with an equal amount of floating holidays to be taken with two (2) days notice at any time up to December 24th of the following year. If these floating holidays are not utilized they will be paid in lieu of time off in the first full pay period of the following calendar year.

3. Employees working during this period will be required to work in other classifications if the need arises.

4. Restrictions of overtime sharing within classifications will be waived for this holiday period.

5. If an emergency situation arises that requires additional manpower, the Company will attempt to contact the employee within the needed classifications on the basis of seniority. If no additional help can be obtained through this procedure, the Company reserves the right to use salaried employees to do the required work.

6. A tentative work crew roster will be completed by December 10 of each year preceding the holiday period and the Union will be informed.

Article 18 – BEREAVEMENT PAY

18.1 When death occurs in his immediate family (current spouse, parent, stepparent, parent or stepparent of current spouse, child, stepchild, brother, stepbrother, sister, stepsister, grandparents, grandparents of current spouse, grandchild, step grandchild) an active employee with seniority, on request, will be excused for up to three (3) regularly scheduled days of work during the three (3) days (excluding Saturdays, Sundays and paid holidays) immediately following the death. After making written application within 30 days following the death, the employee shall

receive 24 hours pay. Days of layoff, leave of absence, and short-term military duty are days for which the employee is not entitled to Bereavement Pay.

18.2 When a death occurs prior to or during a vacation which is scheduled, up to one week of vacation shall be cancelled and rescheduled, should the employee so desire.

18.3 Payment shall be made at the employee’s regular straight-time hourly rate at the time of the death . Time thus paid will not be counted as hours worked for purposes of overtime.

18.4 Bereavement Pay will be paid in instances involving stillborn birth after seven months.

18.5 When the date of the funeral or memorial service is outside the initial three-day period following the death, the employee may have his excused absence from work delayed until the period of three normally scheduled working days, which includes the date of the funeral.

18.6 In the event an employee is granted a leave of absence because of the illness of a member of his immediate family and such family member dies within the first seven (7) calendar days of the leave, the requirement that the employee otherwise would have been scheduled to work will be waived.

Article 19 - PAY FOR JURY DUTY

19.1 Any employee with seniority who is called to and reports to qualify or serve on Jury Duty (including coroner’s juries) or who is subpoenaed to appear as a witness, shall be paid the difference between his regular wages for the number of hours, up to eight (8) that he otherwise would have been scheduled to work -and the money he receives for each day partially or wholly spent in performing the duties of a juror or a witness, if the employee otherwise would have been scheduled to work for the Company. In order to receive payment under this section, an employee must give the Human Resources Department prior notice that he has been summoned or subpoenaed and must furnish satisfactory evidence of the summons or subpoena and the fact that he reported and as a result lost time on the days for which he claims such payment.

19.2 An employee who is subpoenaed to serve as a witness in a Federal or State court of law in the state in which he is working or residing will not be eligible for pay under this article If he:

a) is called as a witness against the Company or its interests; or

b) is called as a witness on his own behalf in an action in which he is a party; or

c) voluntarily seeks to testify as a witness; or

d) is a witness in a case arising from or related to his outside employment or outside business activities.

19.3 An employee assigned to the third shift will not be required to work on the shift immediately preceding the time such employee is to report or if the hours scheduled or the distance to be traveled substantially results in such employee losing the scheduled workday prior to or following the day of duty, such employee will be paid his regular wages for such day. An employee assigned

to the first shift, and an employee assigned to the second shift will not be required to work on the day such employee is to report.

Article 20 - SHORT-TERM MILITARY DUTY PAY AND RE-EMPLOYMENT RIGHTS

20.1 An employee with one or more years of seniority who is called to and performs short-term active duty of thirty (30) days or less, including annual active duty for training, as a member of the United States Armed Forces Reserve or National Guard shall be paid by the Company for each day partially or wholly spent in performing such duty, if the employee otherwise would have been scheduled to work for the Company and does not work, an amount equal to the difference, if any, between the employee’s regular straight-time hourly rate on the last day worked and his daily military earnings (including all allowances except for rations, subsistence and travel). The Company’s obligation to pay an employee for performance of military duty under this Section is limited to a maximum of ten (10) scheduled working days in any calendar year, except that short term active duty for call-outs by state or federal authorities in case of public emergency shall be limited to a maximum of thirty (30) scheduled working days in any calendar year.

20.2 In order to receive payment under this Section an employee must give the Company prior notice where possible of such military duty and upon his return to work must furnish the Company with a statement of his military pay while on such duty.

20.3 RE-EMPLOYMENT RIGHTS AND BENEFITS FOR EMPLOYEES IN MILITARY SERVICE Any employee who enters into the Armed Forces of the United States under existing Federal Regulations shall be granted a leave of absence and will be accorded reinstatement rights as provided by the applicable laws then in force. While in military service, the Company agrees to continue, at the option of the employee, the same Hospital-Surgical-Medical-Drug coverage for dependents of the employee as the Company furnishes to other employees in the Bargaining Unit from which he left. For this coverage the employee will pay the Company the actual Company rate. The maximum time limit for continuance of this insurance is three (3) years.

21.1 An employee shall be granted a personal leave of absence provided such leave is for good and sufficient cause as determined by the Company and is approved by the Company , and such employee will accumulate seniority during such leave. Such leave will be for a period not to exceed six (6) months with the privilege of requesting an extension.

22.1 An employee with seniority who is unable to work because of injury or illness shall be granted a sick leave of absence with accumulated seniority for the duration of the disability but not to exceed six (6) months without renewal.

22.2 A medical leave of absence for injury or illness must be substantiated, with satisfactory evidence of the employee’s condition, as soon as possible but no later than time required in Section 7.30. The Company will, however, consider extenuating circumstances which prevent the timely submission of such evidence, on an individual basis.

22.3 Medical leaves of absence may be granted in accordance with the disability plan.

23.1 An - employee who is injured on the job for whom first aid is inadequate but a doctor’s care is required will, on the initial day of medical treatment, be provided transportation to and from the doctor’s office or hospital.

23.2 If the employee, in the opinion of the doctor, is able to return to work for the balance of his shift he shall do so; if the doctor or the Company excuses him for the balance of the shift he may go home.

23.3 An employee who must leave the plant for medical attention as described above, shall be compensated at his regular rate of pay, up to a maximum of the balance of the shift.

23.4 Employees who are able to return to work but need subsequent medical attention shall be paid for time actually lost as provided above if such care occurs during their regularly scheduled working hours. The question of the necessity for such re-visits shall be determined by the attending physician. The employee will make every effort to schedule such visits outside of normal working hours.

23.5 A Union Representative will be notified and may be present when a Workers’ Compensation claim is discussed with an employee during regular working hours on the Company premises.

23.6 If such lost time occurs on a Saturday, Sunday or a holiday for which he is scheduled to work, the employee shall be paid on the basis of premium pay applicable for that day.

24.1 The Company will conduct its plant and office in such a manner that they will meet the requirements of workplace inspection laws and other laws for protection of the health and safety of employees.

24.2 A Safety Committee shall be set up. This committee shall consist of one member of the Bargaining Committee and one representative of the Company.

24.3 The Safety Committee shall be paid at their regular hourly rate for such time as may be necessary to investigate and meet on safety issues. Company and Union Safety Committee representatives may accompany Government Health and Safety inspectors - on plant inspection tours.

24.4 Upon request of the Safety Committee, the Company will make available copies of reports concerning Health and Safety matters. The Company will provide copies of the OSHA “Log of Occupational Injuries and Illnesses,” as it is now constituted, to the designated Union Safety Representative.

24.5 An employee who believes he is working on an unsafe machine or operation shall report such condition to his supervisor immediately. When required by OSHA, the Company will provide physical examinations and other appropriate tests for employees who are exposed to potentially toxic agents or materials, at no cost to the employees.

24.6 Any disagreement or dispute relating to safety and/or health which cannot be resolved by the Safety Committee may be treated as a grievance and processed through the regular grievance procedure. When written notice is given that a grievance based upon an alleged violation of this article, has not been satisfactorily settled in the First Level, it shall be placed immediately in the last level of the local agreement’s Grievance Procedure, involving the local management, local committee and the International Union Representative.

24.7 The Company shall provide the necessary or required personal protective equipment, devices and clothing at no cost to employees in accordance with present local practice.

24.8 A Hazardous Communication Program (HCP) has been developed that adopts the OSHA Standards regarding hazardous materials in the workplace, and the employees’ right to know the contents and safe handling procedures of such materials. (OSHA Standard 1910.1200 Hazard Communication.) The Safety Committee will review the HCP Program and make recommendations for necessary updates and improvement on an annual basis.

24.9 The Company will provide protective gloves at various safety stations for use when assisting injured employees, in accordance with OSHA standard.

25.1 The Company will offer three health care plans, starting January 1, 2002:

1. Revised OmniCare Health Plan – no weekly premium contribution by employees.

2. Revised Health Alliance Plan (HAP) – with the following weekly employee contributions:

	YR1		YR2		YR3
Single	$	3.00	$	5.00	$	6.00
Couple	$	6.00	$	8.00	$	9.00
Family	$	8.00	$	11.00	$	13.00

7. Revised Trigon Health Plan – with the following weekly employee contributions:

	YR1		YR2		YR3
Single	$	8.00	$	9.00	$	11.00
Couple	$	12.00	$	14.00	$	17.00
Family	$	17.00	$	20.00	$	24.00

25.2 The schedule of benefits for each plan will be fixed for the life of the agreement, and will be made available to employees at annual open enrollment. The above plans are subject to availability from the carrier.

25.3 OPT OUT BONUS - Employees may elect to decline health care coverage, with proof of alternate coverage, and will receive fifty dollars ($50.00) per month from the Company.

25.4 The Company will provide a standard group Dental plan effective January 1, 2002 with the following weekly employee contributions:

	YR1		YR2		YR3
Single	$	1.00	$	1.50	$	2.00
Couple	$	2.00	$	2.50	$	3.00
Family	$	3.00	$	3.50	$	4.00

Benefits include annual maximum of $1,000 per patient; Deductible $25 single or $75 family per year; Orthodontic lifetime maximum $1,200; preventive and diagnostic services not subject to deductible at 100% of reasonable and customary fee; Basic Restorative Services 80/20 co-pay; Crowns 50/50 co-pay; Prosthodontics 50/50 co-pay; Child Orthodontia 50/50 co-pay.

25.5 RETIREE INSURANCE

1. VEBA – The current VEBA plan and contribution level will be maintained for the life of the Agreement.

2. HEALTH AND LIFE INSURANCE – Eligible employees with pension credited service dates on or before January 1, 1991 will be eligible for retiree health and life insurance; others none. Surviving spouse pensions will include health insurance on the survivor and/or eligible children provided they were insured under the retiree group insurance plan at the time of the retiree’s death. Surviving spouse insurance terminates should the eligible survivor re-marry.

3. DENTAL INSURANCE – Eligible employees with pension credited service dates on or before January 1, 1991 will be eligible for retiree dental coverage for the employee only (no dependent coverage) for a period of two years following the date of retirement.

4. CONTRIBUTION – No weekly premium contribution for eligible retirees.

5. CARRIER – retirees may participate in any plan offered to active employees, subject to availability from the carrier.

25.6 DISABILITY

1. SICKNESS AND ACCIDENT (S&A) PLAN - The Company will provide a disability plan that provides a benefit of 66-2/3% of an employee’s base pay to a maximum of $450 weekly, for a maximum benefit of twenty-six (26) weeks.

2. LONG TERM DISABILITY PLAN – The Company will also provide a long term disability plan that provides a weekly benefit of fifty percent (50%) of an employee’s weekly base pay to a maximum of $450 weekly, for a maximum benefit period of twenty-four (24) months.

25.7 CONTINUATION OF INSURANCE BENEFITS WHILE LAID OFF OR ON DISABILITY

1. WHILE ON LAYOFF – Life, AD&D, health, and dental insurance will continue while on layoff for the length of the layoff, or for six (6) months maximum.

2. WHILE DISABLED – Life, AD&D, health and dental insurance will continue for the length of the disability or for thirty (30) months maximum.

25.8 LIFE INSURANCE – The company will provide to eligible employees, forty thousand dollars ($40,000) of group term life insurance and forty thousand dollars ($40,000) of group accidental death and dismemberment insurance on the employee only.

25.9 OPTIONAL DEPENDENT LIFE INSURANCE – Eligible employees may purchase optional dependent life insurance for their spouse and eligible children who are at least fourteen days old, at rates determined by the carrier, in one of the following two options: (1) Ten thousand dollars ($10,000) group term life on spouse, and four thousand dollars ($4,000) group term life on each eligible dependent child, or (2) Five thousand dollars ($5,000) group term life on spouse, and two thousand dollars ($2,000) on each eligible dependent child. Premiums will be paid through payroll deduction for active employees, and employees on layoff or sick leave may continue optional dependent life insurance coverage by paying the required premiums, for as long as their benefit eligibility status continues according to the carrier.

25.10 EMPLOYEE ELIGIBILITY - New hires will become eligible for health, dental, disability, life, optional dependent life, and ad&d, provided they are a full time active employee, and provided they qualify according to plan rules, and provided they make any required employee contribution or premium payments, on the first calendar day of the month following completion of sixty (60) calendar days of employment. Should the employee be disabled or otherwise ineligible on this date all group insurance effective dates will be postponed until the employee is in active status and has returned to work. All full time hourly bargaining unit Employees are eligible for group insurance. Temporary and part time employees who do not acquire seniority are not eligible.

25.11 DEPENDENT ELIGIBILITY – Dependents are eligible for health, dental, and optional dependent life insurance, provided they qualify according to plan rules, and the employee makes any required dependent contribution or premium payments. The employee’s spouse and unmarried dependent children (including adopted children and step-children in the household) until the end of the calendar year in which such children attain twenty-five (25) years of age, provided that any child over nineteen (19) years of age must legally reside with or be a member of the household of the employee (or may reside elsewhere provided a court order requires the employee

to provide medical care for the child) and must be dependent upon the Employee within the meaning of the Internal Revenue Code of the United States, and must be a full time student. Dependents hospitalized on the dependent health insurance effective date will not be covered in the Group until they are released from the hospital and no longer under a physician’s care, and able to carry on the regular and customary activities of a healthy person of the same age and sex.

25.12 STATUS CHANGES – Employees are required to notify human resources of any eligibility status changes (i.e. divorce, marriage, birth of child, etc) immediately. Failure to do so within thirty (30) calendar days may jeopardize eligibility for group insurance benefits, and could invalidate claims paid in error.

25.13 BENEFICIARY – Employees are required to keep an up-to-date beneficiary election on file in human resources, and to notify immediately of any change.

25.14 SUMMARY PLAN DESCRIPTIONS – Summary plan descriptions will be provided from time to time by the Company or by the carrier, as required by law.

25.15 FLEXIBLE SPENDING ACCOUNTS – The Company will make available to employees, provided it is allowable under law, a flexible spending account for (1) qualified health expenses and (2) qualified dependent care expenses. Both of these accounts are optional, and require employee pre-tax contributions which are forfeited following the calendar year if expenses submitted for reimbursement are less than the amount contributed. Details of the plans will be provided annually to employees for their consideration at open enrollment time.

Article 26 – 401(k) PLAN

26.1 The Formsprag 401(k) plan will be continued for the life of the Agreement and a Summary Plan Description will be distributed to employees.

Article 27 – PENSION

27.1 The Pension Plan will be continued for the life of the Agreement and Summary Plan Descriptions will be distributed to employees.

27.2 BASIC BENEFIT - $32.50

27.3 EARLY RETIREMENT SUPPLEMENT – maintained for all employees whose pension credited service date is January 1, 1991 or earlier as of the date of the Contract. Eliminated for all other employees.

27.4 INTERIM SUPPLEMENT - maintained for all employees whose pension credited service date is January 1, 1991 or earlier as of the date of the Contract. Eliminated for all other employees.

27.5 MEDICARE BENEFIT – maintained for all eligible employees on the seniority list as of the date of the Contract.

27.6 SURVIVOR PENSION BENEFIT OPTION – maintained for all eligible employees on the seniority list as of the date of the Contract.

27.7 SPECIAL EARLY PENSION BENEFIT OPTION – maintained for all eligible employees on the seniority list as of the date of the Contract.

27.8 TEMPORARY BENEFIT SUPPLEMENT (Part of Special Early) – maintained for all eligible employees on the seniority list as of the date of the Contract. This supplement will be eliminated effective December 6, 2004, contemporaneous with the expiration of the Contract.

27.9 NEW HIRES: All employees hired on or after December 3, 2001 will participate in the Company’s 401(k) plan in lieu of participating in the pension plan. These employees will receive unilateral contributions to their 401(k) accounts as follows:

1. FIRST YEAR OF EMPLOYMENT – One percent (1%) of employee’s gross earnings.

2. SECOND YEAR OF EMPLOYMENT – One and one-half percent (1.5%) of employee’s gross earnings.

3. THIRD YEAR OF EMPLOYMENT – Two percent (2.0%) of employee’s gross earnings.

4. VESTING – The above Company contributions will vest at the end of the employee’s third year of continuous employment.

28.1 WAGES

1. FIRST YEAR OF CONTRACT - There will be a lump sum wage payment equal to two percent (2%) of gross earnings for the prior fifty-two (52) week period, to be paid by separate check on or before December 21, 2001.

2. SECOND YEAR OF CONTRACT - There will be a lump sum wage payment equal to two percent (2%) of gross earnings for the prior fifty-two (52) week period, to be paid by separate check within three weeks of December 1, 2002.

3. THIRD YEAR OF CONTRACT – There will be a two percent (2%) base rate wage increase effective for work performed on or after December 2, 2003.

28.2 COLA

1. The COLA float will be rolled into the base wage rate effective December 3, 2001.

2. COLA is frozen in Year 1 of the contract.

3. COLA is capped at fifteen cents maximum in Year 2 of the Contract.

4. COLA is capped at fifteen cents maximum in Year 3 of the Contract.

5. COLA earnings for Year 2 and Year 3 will be paid out in a lump sum by November 30, 2003 and by November 30, 2004 respectively.

28.3 RATE SCHEDULE AND CLASSIFICATIONS – The rates and classifications at Formsprag are shown on Schedule 2000.

Article 28 – TRANSFER OF AGREEMENT

28.1 This Agreement shall be binding upon the Company and/or the Union successors, assigns or transferees.

29.1 In the event that any of the provisions of this Agreement shall be or become invalid or unenforceable by reasons of any Federal or State Law or Executive Order now existing or hereafter enacted, such invalidity or unenforceability shall not affect the remainder of the provisions of this Agreement. In addition, the parties may agree upon a replacement from the affected provision(s). Such replacement provision(s) shall become effective immediately upon agreement of the parties, without the need for further ratification by the Union membership, and shall remain in effect for the duration of this Agreement.

30.1 The foregoing constitutes an agreement between the Company and the Union. It is to become effective December 3, 2001, the date of the Monday following ratification and to continue in effect until 12:01 a.m., December 6, 2004. If either party desires to modify, amend, or terminate the Agreement, it shall give at least sixty (60) days written notice to the other party before 12:01 a.m., December 6, 2004.

30.2 If neither party serves notice of modification, amendment, or termination, the Agreement shall continue beyond 12:01 a.m., December 6, 2004, subject to sixty (60) days written notice of modification, amendment, or termination.

30.3 This Agreement replaces all Company agreements, supplements, and amendments.

30.4 In witness whereof, the parties have on the - caused this Agreement to be signed by their duly authorized representatives.

FOR THE UNION:		FOR THE COMPANY:



Lance Lindell		Rick Bentzinger
President, Local 155		Vice President, Human Resources


Dennis Krol		Ed Novotny
Plant Chairman		Vice President, Operations


Ralph Thomas		Gary Simpler
Committeeman		Shawe & Rosenthal, LLP


Clay Farley		Joe Crist
Committeeman		Plant Manager


		Kirby Smith
		Manager, Human Resources


		A. Michael McRandall
		Production Manager

LETTER NO. 1

November 30, 2001

To: Lance Lindell and Formsprag Bargaining Committee

Dear Mr. Lindell:

All employees are encouraged to contribute and grow to the limit of their desire and ability by the use of the Company training and education programs, and tuition assistance programs which are to be administered without regard to race, religion, color, sex, age, national origin, disabled veterans, veterans of the Vietnam era, or certified physical or mental disability.

Recruitment of new employees is to be conducted in a manner to assure full equal employment opportunities, and all decisions on employment are to be based on this principle of equal employment opportunity .

As new developments take place regarding equal employment matters, the information will be communicated to all local management and union bargaining committees and our employees as rapidly as possible.

We agree to review and discuss ways and means of encouraging employees and grievance representatives to use the grievance and arbitration procedure as the exclusive contractual method to resolve claims of denial of equal application rights.

	Sincerely,


	Kirby H. Smith
	Manager of Human Resources

LETTER NO. 2

November 30, 2001

To: Mr. Lance Lindell and

Warren, Michigan Plant Bargaining Committee

Dear Mr. Lindell:

The Company was asked to provide the Union, in writing, with its negotiations positions regarding starting and quitting times, break times, wash-up times, and lunch period.

The Company intends to continue the schedule shown for the life of the Agreement.

Should business conditions or Government regulations change, however, which make rearrangement of the times necessary in the Company’s opinion, the Union will be advised of the change in advance of the effective date.

The amount of time permitted is as follows:

Breaks		10 minutes - A.M.
		10 minutes - P.M.
Total		20 minutes

Wash-up
(before lunch)		5 minutes - A.M.
(before shift end)		5 minutes - P.M.
Total		10 minutes

The present work schedule is as follows:

	Day	Afternoon Shift
Starting Time	6:30 a.m.	3:00p.m.
Morning Break	9:20-9:30 a.m.	5:20-5:30 p.m.
Unpaid Lunch	11:00-11:30 a.m.	7:30-8:00 p.m.
Afternoon Break	1:20-1:30 p.m.	10:00-10:10 p.m.
Quitting Time	3:00 p.m.	11:30 p.m.

		Sincerely,

		Kirby H. Smith
		Manager of Human Resources

November 30, 2001

To: Mr. Lance Lindell and

Formsprag Plant Bargaining Committee

It appears that efforts toward combining classifications and tasks provide benefits to both the employees and the Company. Therefore, we consider it mutually advantageous to continue these efforts and discussions during the course of the new contract period.

Specifically when classifications become vacant, we have agreed to meet with you and discuss their combination or elimination.

This agreement to discuss does not change any rights that the Company now has under the current Labor Agreement to combine or eliminate classifications.

This will confirm our mutual understanding that if classifications are combined in the future, the relative seniority positions in the new classification will reflect the actual classification seniority held by the effected employees prior to the combination.

We further agree to review with you any combinations of classifications which occurred in the preceding Labor Agreement and make appropriate adjustments to assure that classification seniority is determined in the manner described above.

	Kirby H. Smith
	Manager of Human Resources

LETTER NO. 4

November 30, 2001

To: Lance Lindell and Formsprag Bargaining Committee

Re: Holiday Pay and Disciplinary Suspension

This will confirm that for the life of this Agreement, the Company will continue its policy of not affecting an employee’s holiday pay entitlement as a result of a disciplinary suspension.

	Sincerely,


	Kirby H. Smith
	Manager of Human Resources

Letter No. 5

November 30, 2001

To: Lance Lindell and

Formsprag Bargaining Committee

Dear Mr. Lindell:

Should it become necessary to discontinue the Formsprag Clutch operation, the Company will give the Union a minimum of six (6) months advance notice.

In addition, the Company will provide severance pay to eligible employees affected by such a closing as follows:

1. Employees who are on the active payroll at the time notice of plant closure is given to the Union, or at any time between such notice and the date of plant closure, will receive severance benefits equal to three months (13 weeks) pay at the employee’s base rate.

2. Employees hired by the Company on or after December 3, 2001 are not eligible for severance benefits.

3. In order to receive severance benefits, eligible employees must remain employed by the Company until such time as they are released by the Company due to the cessation of operations.

	Sincerely,


	Kirby H. Smith
	Manager of Human Resources

CONTRACT EXTENSION AGREEMENT

Formsprag, LLC (hereinafter “the Company”) and United Automobile, Aerospace and Agricultural Implement Workers of America, UAW Local No. 155 (hereinafter “the Union”) hereby agree that due to the pending sale of Colfax Power Transmission Group division (the present owner of Formsprag LLC) which is expected to be completed by year-end, the current collective bargaining agreement will be extended in full force and effect through 12:01 a.m. on June 6, 2005. Holidays for the Christmas Holiday Period through Memorial Day shall be as designated on Attachment A to this Agreement.

In consideration of the Union’s agreement to extend the collective bargaining agreement, the Company agrees to make any wage increase negotiated in June 2005 retroactive to December 6, 2004. COLA will continue as presently stated in the collective bargaining agreement unless terminated or modified through collective bargaining negotiations. In addition, the Company will maintain the present weekly employee health care coverage contributions at their current rates through June 5, 2005.

Agreed to this day of November 2004

Formsprag LLC			United Automobile, Aerospace and Agricultural Implement Workers of America, UAW Local No. 155

By			By

ATTACHMENT A

Formsprag Shop Holidays – December 1, 2004 - June 30, 2005

Friday, December 24, 2004	Christmas Eve
Monday, December 27, 2004	Christmas Day
Tuesday, December 28, 2004	Shutdown Day #1 (Subject to Special Scheduling)
Wednesday, December 29, 2004	Shutdown Day #2 (Subject to Special Scheduling)
Thursday, December 30, 2004	Shutdown Day #3 (Subject to Special Scheduling)
Friday, December 31, 2004	New Years Eve
Saturday January 1, 2005	New Years Day - To be used as Floating Holiday, requested 2 days in advance
Friday, March 25, 2005	Good Friday
Monday, May 30, 2005	Memorial Day
Floating Holiday	Requested 2 days in advance, as arranged with Supervision

EX-10.3 33 a2155511zex-10_3.htm EXHIBIT 10-3

Exhibit 10.3

BASIC AGREEMENT

BETWEEN

Warner Electric, LLC

and

United Steelworkers

of America

and

Local Union No. 3245

For Contract Years

January 30, 2005 through February 3, 2008

• Safety is our first priority. Safety concerns must be managed before other business concerns can be successfully accomplished.

• Working safely is a condition of employment. All employees are required to work safely and follow all safety rules and regulations.

• No job is so important that it cannot be done safely. Safety precautions must be taken before and during any job.

• All injuries can be prevented. With management taking responsibility to ensure a safe environment and all of us working safely, this is a realistic goal.

• Every employee is responsible for preventing injuries. When we all work safely, act safely, and report any unsafe condition, we are doing our part to prevent injuries.

• Training employees to work safely is essential. For every employee to be responsible for safety, he/she must know what safe conditions, acts, and operations are. To achieve that level of understanding, appropriate training will be given.

• All operating exposures can be safeguarded. To ensure safe working conditions, all areas or points that are dangerous and cannot be practically eliminated, will be safeguarded by way of safety devices, warnings, guards, personal protective equipment or other appropriate means.

INDEX

Article

I	Intent, Purpose and Scope of Agreement
II	Recognition
III	Hours of Work
IV	Overtime and Allowed Time
	Holidays – Paragraph 26
	Overtime Distribution – Paragraph 30
	Call-In/Report-In Pay – Paragraph 34
	Bereavement Pay – Paragraph 35
V	Vacations
VI	Seniority
	General
	Rule for Applying Seniority
	Seniority Defined
	Transfer of Seniority
	Decrease in Forces
	Recall to Occur As Follows
	Loss of Seniority
	Probationary Period
	Information to the Union
	Shift/Job Transfers
	Temporary Transfer
	Job Posting
VII	Military Service
VIII	Leave of Absence
	Jury Service – Paragraph 81
IX	Adjustment of Grievances
	To File a Grievance – Paragraph 86
	Suspension – Paragraph 102
X	Bulletin Boards
XI	Wages
	Job Descriptions/Evaluations – Paragraph 106
	Temporary Transfer Rate – Paragraph 115
	Shift Differential – Paragraph 116
XII	Cost-of-Living
XIII	Safety and Health
XIV	Insurances and Pensions
XV	Severance Allowance
XVI	Termination, Expiration and Scope
XVII	Compliance with Law
Appendix A – Classification by Pay Rate
Appendix B – Rate Retention Groups
Appendix C – Overtime Distribution Agreement
Appendix D – Overtime Groups
Appendix E – Insurances
Insurance Agreement

NOTICE TO ALL EMPLOYEES

WHEN UNABLE TO

REPORT FOR WORK

CALL

(815) 389-4300

OR YOUR SUPERVISOR’S

DIRECT PHONE NUMBER.

THIS WILL ENABLE THE

COMPANY TO ACCURATELY

MAINTAIN YOUR

ATTENDANCE RECORD.

***********************************************

TO LEAVE AN EMERGENCY MESSAGE

CALL

(815) 389-7777

LEAVE YOUR NAME, TELEPHONE #,

AND MESSAGE AND HANG UP.

YOUR EMERGENCY MESSAGE WILL BE

RESPONDED TO.

AGREEMENT

1. This Agreement is made and entered into January 30, 2005 by and between WARNER ELECTRIC, LLC, or its successors or assigns, (hereinafter referred to as the “COMPANY”) and the UNITED STEELWORKERS OF AMERICA (hereinafter referred to as the “UNION”) on behalf of itself and Local Union No. 3245. The Company will furnish each present or new employee with a copy of this Agreement.

ARTICLE I

Intent, Purpose and Scope of Agreement

2. It is the intent and purpose of this Agreement to set forth herein the basic rules covering rates of pay, hours of work, and conditions of employment to be observed by the parties hereto. It is further understood and agreed that this Agreement together with any written appendices, supplements or letters of understanding hereto contains all understandings between the Company and the Union. This Agreement cannot be modified or amended except in writing signed by the Company and the Union. No individual shall have any right to modify, amend or revoke this Agreement.

3. This Agreement relates to the South Beloit plant of the Company located at 449 Gardner Street, South Beloit, Illinois.

4. The Company and Union will apply the provisions of this Agreement to all employees, without discrimination as to age (as provided in appropriate laws), sex, color, national origin, race or religion.

5. COOPERATION – The Union, the Company and all employees covered by this Agreement mutually agree to make every reasonable effort to maintain and improve the skill, efficiency, ability, and production of all employees, the quality of products, the methods and facilities of production, and to eliminate accidents, waste, conserve material and supplies and improve quality of workmanship.

ARTICLE II

Recognition

6. The Company hereby recognizes the Union as the exclusive bargaining agent for all its production, maintenance, and service employees, excluding Sales Persons, Service Manager, Assistant Service Manager, Service School Instructors, office and plant clerical employees, technical employees, timekeepers, Industrial Engineering Department employees, security personnel, plant superintendents, assistant superintendents, supervisors, assistant supervisors, and other supervisory employees with authority to hire, promote, discharge, discipline or otherwise effect changes in the status of the employees, or effectively recommend such action, in all those matters specifically provided for herein pertaining to wages, hours, and working conditions.

7. The Union hereby recognizes that the Management of the plant and the direction of the working forces including the right to direct, plan, and control plant operations, and establish and change production schedules, the right to hire, promote, demote, transfer, suspend or discharge employees for proper cause, or to relieve employees because of lack of work or for other legitimate reasons, subject to the provisions of this Agreement, or the right to introduce new and improved methods or facilities, or to change existing production methods or facilities, and to

manage the properties, is vested in the Company.

8. No employee shall engage in any activity not authorized by the Company, which shall interfere with production. This section shall not restrict the legitimate activities of the Shop Committee members pursuant to Article IX, Par. 97, Safety Committee members pursuant to Article XIII Par. 134, and the members of the Job Evaluation Committee, Worker’s Compensation Committee, Civil Rights Committee, Group Insurance Committee, Pension Committee and Apprenticeship Committee as authorized by the appropriate Company representatives.

9. Any employee who is a member of the Union in good standing on the effective date of this Agreement shall, as a condition of employment, maintain membership in the Union to the extent of paying the periodic membership dues uniformly required of all Union members.

10. Any employee who, on the effective date of this Agreement, is not a member of the Union and any employee thereafter hired, shall, as a condition of employment, starting thirty (30) days after the effective date of this Agreement, or thirty (30) days following the beginning of their employment, whichever is the later, acquire and maintain membership in the Union to the extent provided in Paragraph 9 above.

11. The Union agrees that it will make membership in the Union available to all employees covered by this Agreement on the same terms and conditions as are generally applicable to other members of the Union. At the instance of the Company, termination of Union membership for reasons other than the failure of the employee to tender the dues, assessments and initiation fees specified in this Agreement, may be submitted to an impartial arbitrator under the grievance procedure of the Agreement for determination only as to whether such termination conforms to the Constitution of the United Steelworkers of America.

12. On receipt of a voluntary written assignment authorizing such deduction from the employee on whose account such deductions are made, the Company shall deduct union dues, initiation fee, and assessments in accordance with the Constitution of the United Steelworkers of America, as certified to the Company by the International Treasurer of the Union. The Company shall deduct Union dues on a weekly basis, based on the employee’s earnings from that week. Any sum deducted by the Company pursuant to this paragraph shall be remitted promptly by it to the International Treasurer of the Union.

13. Should the International Treasurer of the Union certify to the Company in writing that changes in dues or initiation fees have been duly adopted by the United Steelworkers of America, during the term of this Agreement, the Company shall deduct the changed dues or initiation fees have duly adopted by the United Steelworkers of America, during the term of this Agreement, the Company shall deduct the changed dues or initiation fees in the manner provided in Par. 12.

14. The Union shall indemnify and hold the Company harmless against all suits, claims, demands and liabilities that shall arise out of or by reason of any action that shall be taken by the Company for the purpose of complying with these foregoing provisions or in the reliance on any list or certificate which shall have been furnished by the Company under these provisions.

15. During the life of this Agreement, the Union agrees that there will be no strikes, stoppages, or slowdowns; the Company agrees that there shall be no lockouts. Both parties promise and agree that they shall, in an endeavor to prevent such events from taking place, charge their representatives, committees, and agents with full responsibility for the performance of each

and every promise and undertaking herein contained. No meetings of the Union’s membership shall be scheduled during regular working hours without mutual agreement of the parties in writing.

16. Except during an emergency, employees excluded from the provisions of this agreement shall not perform production or maintenance work. Instruction, engineering analysis, continuous improvement team activities, assistance in debugging machinery, product demonstrations, lab work, and safety and ergonomic evaluations do not constitute production or maintenance work.

ARTICLE III

Hours of Work

17. This article defines the normal hours of work and shall not be construed as a guarantee of hours of work per day or per week. This Article shall not be considered as any basis for the calculation or payment of overtime, which is covered solely by Article IV, “Overtime.”

18. The normal workday shall be eight (8) hours of work in a twenty-four (24) hour period. The hours of work shall be consecutive except when an unpaid lunch period is provided in accordance with prevailing practices.

19. Rest periods shall be provided and taken as follows:

First Shift:	9:30 a.m. to 9:45 a.m.	-	15 minutes
	12:30 p.m. to 12:40 p.m.	-	10 minutes

Second Shift:	5:30 p.m. to 5:45 p.m.	-	15 minutes
	9:00 p.m. to 9:10 p.m.	-	10 minutes

Third Shift:	1:00 a.m. to 1:15 a.m.	-	15 minutes
	4:40 a.m. to 4:50 a.m.	-	10 minutes

On regular six (6) hour shifts on Saturday and Sunday, rest periods shall be provided and taken as follows:

All Shifts:

Three (3) hours into the six (6) hour shift. -

15 minutes

except that rest periods shall be staggered by the Company where necessary to insure continuous production operations. Relief personnel will be assigned to the continuous production operation to provide the relief period for the operator.

20. The normal work pattern shall be five (5) consecutive workdays beginning at 12:01 a.m. Monday of each week, or at the time on Monday at which the employee begins work. Seven (7) consecutive days beginning at 12:01 a.m. Monday shall constitute a payroll week.

ARTICLE IV

Overtime and Allowed Time

21. This Article provides the basis for the calculation of, and payment for, overtime and shall not be construed as a guarantee of hours of work per day or per week, or a guarantee of days of

work per week.

(A) The payroll week shall consist of seven (7) consecutive days commencing at 12:01 a.m. Monday for the purpose of computing the pay of employees.

(B) The work day for the purposes of this Article is the twenty-four (24) hour period beginning with the time the employee begins work.

22. Time and one-half shall be paid for:

(A) Hours worked in excess of eight (8) hours in a work day (except where the work in excess of eight (8) hours in the work day occurs as a result of a change in the employee’s work schedule resulting from the request of the employee or resulting from the exercise of seniority rights;

(B) Hours worked in excess of forty (40) hours in a payroll week;

23. Double time shall be paid for all hours worked on Sunday as such, and for hours worked in excess of twelve hours in a work day, except where the work in excess of twelve hours in a work day occurs as a result of a change in the employee’s work schedule resulting from the request of the employee, or resulting from the exercise of seniority rights.

24. In all instances of premium pay for work on a day as such, the employee’s entire shift shall be considered as having been worked on the day on which their shift is regularly scheduled to commence, except if the employee’s first regular shift of the work week begins between 10:00 p.m. and 12:00 midnight on Sunday, during such week, each shift shall be considered as having been worked on the day their shift is scheduled to end.

25. Work performed by employees on their floating holiday, which will be on a voluntary basis, will be paid at double time plus holiday pay. Work performed by employees on all other holidays will be paid at triple time plus holiday pay. The scheduling of floating holidays during the Christmas period will be at the employee’s discretion.

26. Holidays

Contract Year 2005

March 25 - Good Friday (Friday)

May 30 - Memorial Day (Monday)

July 4 - Independence Day (Monday)

September 5 – Labor Day (Monday)

November 24 – Thanksgiving (Thursday)

November 25 – Day after Thanksgiving (Friday)

December 24 – Christmas Eve (Saturday) Celebrated December 23

December 25 – Christmas Day (Sunday) Celebrated December 26

December 31 – New Years Eve (Saturday) Celebrated December 30

January 1, 2006 - New Years Day (Sunday) Celebrated January 2

Contract Year 2006

April 14 - Good Friday (Friday)

May 29 - Memorial Day (Monday)

July 3 – Day Before Independence Day (Monday)

July 4 – Independence Day (Tuesday)

September 4 – Labor Day (Monday)

November 23 – Thanksgiving (Thursday)

November 24 – Day after Thanksgiving (Friday)

December 24 – Christmas Eve (Sunday) Celebrated December 25

December 25 – Christmas Day (Monday) Celebrated December 26

December 31 – New Years Eve (Sunday) Celebrated January 1

January 1, 2007 - New Years Day (Monday) Celebrated January 2

Contract Year 2007

April 6 - Good Friday (Friday)

May 28 - Memorial Day (Monday)

July 4 - Independence Day (Wednesday)

September 3 – Labor Day (Monday)

November 22 – Thanksgiving (Thursday)

November 23 – Day after Thanksgiving (Friday)

December 24 – Christmas Eve ( Monday)

December 25 – Christmas Day (Tuesday)

December 31 – New Years Eve (Monday)

Jan. 1, 2008 - New Year’s Day (Tuesday)

Three (floating) holidays in each year of the contract to be scheduled in accordance with current vacation scheduling process and paid as 8 hr. of classification rate as holiday pay.

27. The regular earned hourly rate shall be the average straight time hourly earnings for the day on which the overtime was worked. The “average straight time hourly earnings” shall be the employee’s total straight time hourly earnings for the day, divided by the actual hours worked for the day (including any hours paid for under a guarantee of hours). Overtime rates as outlined above shall be paid the employees for such hours worked in the following manner:

(A) Time and one-half shall be one and one-half times the regular earned hourly rate of the employee.

(B) Double time shall be twice the regular earned hourly rate of the employee.

28. The overtime and/or the premium payments provided for in this Article shall not be duplicated for the same hours worked and to the extent that hours are compensated for at overtime or premium rates under one provision, they shall not be counted as hours worked in determining overtime or premium pay under the same or any other provisions.

29. When two or more rules are applicable, the one more favorable to the employee will apply, but nothing contained herein shall be construed to require or permit the pyramiding of premium and/or overtime rates.

30. Both parties agree that overtime shall be worked when necessary to permit the proper operation of the Company. Overtime will be distributed among employees in the overtime distribution groups identified in Appendix C, which groups may be changed from time to time in recognition of new or revised job classification and new or revised cost centers, subject to the grievance procedure.

31. Holidays defined in Par. 26 of this Article will be paid for at the employee’s classification

rate and the Cost-of-Living adjustment if not worked.

32. During the term of this Agreement the days (defined above) will be paid holidays. To qualify for holiday pay, an employee must have completed the first thirty (30) calendar days of their probationary period and must have worked their assigned shift on their last scheduled workday before the holiday (which may not be mandated to exceed 8 hours) and their assigned shift on their first scheduled workday following the holiday. In cases of holidays which are observed on Friday or Monday, neither the adjoining Saturday nor the adjoining Sunday shall be considered as a “scheduled work day before” nor a “scheduled work day after” the holiday for purposes of qualifying for holiday pay, and work on such Saturday or Sunday shall be voluntary except that concerted refusal of such overtime work and failure to work by an employee who had agreed to work shall be disciplinable offenses. If an employee desires to be absent from work the scheduled work day before or after a holiday, they must give reasonable notice prior to the holiday; provided, however, if they are absent from work the scheduled work day before or after a holiday due to circumstances beyond their control, they will not be disqualified from receiving unworked holiday pay. Otherwise eligible employees on disability leaves of absence are eligible for holiday pay up to and including one consecutive year of such leave(s) provided, however, that otherwise eligible employees hired on or after January 28, 1984 on disability leaves of absence shall be eligible for holiday pay up to and including thirty (30) consecutive days following the commencement of such leave(s).

33. The classification rate shall be that of the payroll week in which the holiday falls. If an employee is absent and does not have wages earned during the holiday week, then the classification rate to be used shall be that of the last payroll week the employee worked prior to the holiday week.

34. Employees who report for regular work, (unless notified not to do so, including announcements by local news media) or who are called back to work from off the plant, shall be given either a minimum of four (4) hours’ work at the applicable contract rate (with applicable premiums, if any) for the current payroll period, (provided, that if the employee refuses an assignment of work which they are qualified to do, they shall receive no pay). The provisions of this Paragraph shall not apply in cases of strikes, work stoppages, in connection with labor disputes, failure of utilities beyond the control of the Company, or any acts of God which interfere with work being provided or an outside cause which prevents access, egress or occupancy to the extent that work cannot be provided to the employees.

35. Employees actively at work will be granted three (3) work days off with pay at their classification rate to attend or make arrangements for the funeral of their spouse, mother, father, sister, brother (including half-brothers and half-sisters), son, daughter, grandchild, mother-in-law, father-in-law, or other than a blood-related parent if it can be demonstrated without a reasonable doubt that the employee’s parent is other than the blood-related mother or father. Such employee will receive bereavement pay entitlement for only one mother and one father. Employees actively at work will be granted three (3) days off with pay at their classification rate to attend or make arrangements for the funeral of their brother-in-law or sister-in-law (defined as the brother(s) and/or sister(s) of the employee’s spouse, and the spouse(s) of the employee’s brother(s) and/or sister(s). The in-law relationship ceases to exist when the marriage, which created the relationship, is terminated by divorce, annulment, legal separation or death followed by remarriage. Employees actively at work will be granted one (1) day off with pay at their classification rate to attend or make arrangements for the funeral of the employee and spouses grandmother or grandfather. An employee who has not previously been granted work days off with pay for the funeral of his mother or father may notify the Company that he elects, instead,

such pay rights for the funerals of his maternal grandparents or his paternal grandparents. In the event of such election, the funeral pay rights otherwise applicable to the designated grandparents shall apply to the employee’s parents. Should the death occur during any of the employee’s scheduled weeks or days of vacation, the vacation thus interrupted will be extended by the period of authorized bereavement. Should the death occur during any of the employee’s vacation, or a paid holiday, the vacation or holiday thus interrupted will be extended by the period of authorized bereavement effected.

ARTICLE V

Vacations

36. An employee who has been on the payroll of the Company as of the anniversary date of their employment for the period indicated shall receive the following vacation with pay:

Service		Vacation

1 but less than 3 years		1 week

3 but less than 6 years		2 weeks

6 but less than 7 years		2 weeks and 1 day

7 but less than 8 years		2 weeks and 2 days

8 but less than 9 years		2 weeks and 3 days

9 but less than 12 years		3 weeks

12 but less than 14 years		3 weeks and 1 day

14 but less than 16 years		3 weeks and 2 days

16 but less than 18 years		3 weeks and 3 days

18 but less than 22 years		4 weeks

22 but less than 25 years		4 weeks and 3 days

25 and more		5 weeks

Full weeks of vacation are to be taken as full weeks; extra days may be taken individually. However, employees with two weeks of vacation or more may take their vacation time off entitlement in excess of one week as individual days. Two (2) of the individual days may be taken in (1/2) day increments, subject to the scheduling rules of Paragraph 38.

Employees on the active payroll of the Company on their 30th year of service anniversary date shall receive a $100.00 award and on each such anniversary date thereafter while on the active payroll.

The Company will issue vacation checks under the following guidelines. Full week(s) vacation

checks will be issued on the pay period preceding the start of vacation. Pay for individual vacation days taken will be included in the employee’s regular check for the week it was taken. If an employee takes vacation for all the days in a week when a holiday(s) occurs, except the holiday(s) themselves, the vacation days will be paid in advance as if it were a full week and the holiday(s) will be paid in the week after their occurrence.

37. Vacation pay shall be computed for employees hired on or before January 29, 2005,on the basis of two and one-half (2 1/2) percent of the employee’s gross wages paid in the preceding calendar year for each week of vacation to which they are entitled as provided in Par. 36 of this Article and five-tenths of one percent (.5%) of the employee’s gross wages paid in the preceding calendar year for each additional day of vacation to which they are entitled as provided in Par. 36 of this Article; except an employee who completes one (1) year of service in the calendar year shall have their vacation pay computed on the basis of two and one-half (2 1/2) percent of the gross wages paid in the twelve months immediately preceding their first anniversary date, and thereafter on a calendar year basis as provided in this Paragraph. However, an employee who qualified for vacation in accordance with the provisions of this Article shall receive either the vacation pay as computed above, or a vacation payment computed by multiplying the employee’s vacation entitlement, expressed in hours (one week equaling forty hours, one day equaling eight hours) by their average hourly earned rate (determined by dividing their gross wages by the total hours worked) for the twelve month period specified in this Paragraph, whichever is greater. Employees hired on or after January 30, 2005, shall receive vacation pay calculated on the basis of 40 hours times the employee’s base rate of pay per full week, and 8 hours times the employee’s base rate per day.

38. (A) During any calendar year employees shall be permitted to select the time for vacation subject to (B), (C), (D), (E) and (F) below so far as practicable, provided the employee gives written notice to the Human Resources Department of their preference before April 1, and provided that the Company may schedule in a manner which takes into consideration the operating and maintenance needs of the plant. Conflicts in requests shall be resolved on the basis of seniority. When taking single days of vacation, you must notify your supervisor before the end of your prior shift. Failure to do so will result in an absence. When taking half (1/2) days vacation you must notify your supervisor before the end of your prior shift. Failure to do so will result in an absence.

(B) The Company may schedule a vacation shutdown of 1 week’s duration. In years that the Company schedules a shutdown, notification to employees will be made by March 15.

		Vacation Shutdown

Year 2005	Tuesday	July 5
	Wednesday	July 6
	Thursday	July 7
	Friday	July 8

Year 2006	Wednesday	July 5
	Thursday	July 6
	Friday	July 7

Year 2007	Monday	July 2
	Tuesday	July 3
	Thursday	July 5
	Friday	July 6

(C) When a vacation shutdown is scheduled, shutdown work requirements will be announced at the time the shutdown is announced. Shutdown work requirements will be filled voluntarily from the top of the seniority list in each classification required, and if volunteerism does not meet the need, the balance of the requirements will be met by assignment from the bottom of the seniority list up. Shutdown work requirements that arise subsequent to March 15 will be filled by volunteers from the top of the seniority list. Any employees asked to work will be charged in accordance with Appendix C. Employees not asked to work during the shutdown period will not be charged for any overtime. If an out of overtime spread condition occurs because of the overtime worked during the shutdown period, the Company shall have 30 days to bring the effected employees back into the 30 hour overtime spread.

(D) Employees who are entitled to vacation and who work during vacation shutdown will be permitted to request their vacation so far as practicable, and in consideration of the operating and maintenance needs of the Company, at any other time of the year. In instances where employee vacation requests conflict with the Company’s needs, vacations will be scheduled on the basis of seniority.

(E) In order to qualify for the vacation defined in Par. 36, an employee must have worked not less than seventy (70) percent of the regular days of work available to them during the twelve (12) months immediately preceding January 1 of any calendar year, except in the case of any employee who completes one (1) year of service in the calendar year, it shall be twelve (12) months immediately preceding their anniversary date. It is understood and agreed for this purpose that the absence from work because of Company layoffs due to lack of work (not to exceed ten [10] work weeks), occupational accidents, certified illness, holidays, shall be considered as time worked for the purpose of computing eligibility for vacation privileges.

(F) An employee may take pay in lieu for any earned vacation, not to exceed five (5) days in any year. Such scheduling should be handled with the normal April 1 vacation scheduling procedure. Changes after the vacation schedule is established must be consistent with production needs. Pay in lieu will normally be included in the vacation check at the time the vacation is taken. This shall not change the practice of paying for unused vacation at the end of each calendar year. The Union will be informed of all pay in lieu arrangements. No employee shall be discriminated against based upon his exercise or nonexercise of this understanding.

39. In the event of the death of an employee eligible for vacation pay at the time of their death, such vacation due the employee shall be paid to their surviving spouse or other legal heir.

40. If any employee is laid off for a period equal to or longer than their vacation, the employee may designate the equivalent portion of such layoff period as their vacation with pay.

41. Vacation periods may not be postponed from one year to another and made accumulative, and will be forfeited unless completed within each calendar year, but in any event the employee will receive their vacation pay.

42. An employee entering military service who is eligible for vacation in the year in which they enter and who has not received such vacation shall receive the vacation pay to which they are entitled under this Article.

43 Any employee returning from military service who is eligible for vacation in the year in which they return shall receive a vacation subject to the provisions of this Article, except Par. 38 above, provided it is not in the same year in which they enter. Their vacation pay will be computed as follows: gross wages for the year they return up to the time they take their vacation, divided by the total hours worked, times vacation hours.

44. In the event an employee has their vacation scheduled immediately upon beginning work and therefore does not have any hours worked, their vacation pay is computed by multiplying their rate for the job classification to which they are assigned by their vacation hours.

45. Vacation Pay for Layoffs.

During any calendar year, if an employee is on layoff through no fault of their own and solely as a result of such layoff they have not fulfilled the requirements of Par. 38 (A) of this Article, and such an employee has had earnings in the preceding calendar year, they shall be entitled to two and one-half (2 1/2) percent of their gross wages paid in the preceding calendar year for each week of vacation to which they are entitled as provided for in Par. 36 of this Article and five-tenths of one percent (.5%) of the employee’s gross wages paid in the preceding calendar year for each additional day of vacation to which they are entitled as provided in Par. 36 of this Article. Employees hired on or after January 30, 2005, shall receive vacation pay calculated on the basis of 40 hours times the employees base rate of pay per full week for each week of vacation to which they are entitled as provided for in Par. 36 of this Article and 8 hours times the employee’s base rate per day for each additional day of vacation to which they are entitled as provided in Par. 36 of this Article. Employees who are laid off may elect to receive their vacation pay at the time of layoff under Paragraph 40 and, in accordance with Paragraph 40, a corresponding portion of the layoff will be considered as the employee’s vacation time off at the time of layoff. If the employee does not elect his vacation pay and time off at the time of layoff and is recalled in the same calendar year, they will receive their vacation pay in accordance with Paragraph 46. If the employee does not elect their vacation pay at the time of layoff and is not recalled during the calendar year, they will be paid any vacation pay owing at the end of the calendar year.

46. In the event an employee has been on layoff and is recalled to work during any calendar year, and such an employee has had earnings in the preceding calendar year, but solely because of such layoff has not fulfilled the requirements of Par. 38 (A) of this Article, they shall be entitled to vacation pay as outlined in Par. 45 above. Upon returning to work anytime in the year, such employee will be eligible to receive their vacation pay upon giving one week’s notice but vacation time off will be granted (if requested) consistent with Paragraph 38 of this Article.

ARTICLE VI

Seniority

47. General. The Company and the Union recognize that promotional opportunity and job security in the event of promotions, decreases of forces, and rehirings after layoffs should increase in proportion to length of continuous service, and that in the administration of this Article, full consideration shall be given continuous service in such cases. “Continuous service” as referred to herein, means a period of employment not interrupted by a break sufficient to terminate the employee’s seniority.

48. Rule for Applying Seniority. In all cases of promotion or increase or decrease in forces except when a different rule is stated, the following factors shall be considered; however, only

where factors (B) and (C) are relatively equal shall length of continuous service govern:

(A) Length of continuous service;

(B) Ability to perform the work;

49. Seniority Defined. Length of continuous service as outlined in this Article is defined herein as years, months, and days of service with the Company since the last date of hire. In cases where two or more employees commence work on the same date, the following method will determine the most senior employee:

Shift 3 = Most Senior

Shift 1 = Senior to employee who started on Shift 2

Shift 2 = Least Senior

In the case of two or more employees starting on the same shift and same date, at the orientation, between the Union, employees, and the Company, the employees will draw a card from a deck of cards and the high card will determine the most senior employee, which determination shall be final and govern all future issues of relative seniority during their employment with the Company.

All affected employees who have not established permanent seniority shall do so as outlined by the card drawing provisions of this article. When seniority is established the Company will provide to the Union a listing of the employees affected and a copy to the employee.

50. Transfer of Seniority. Employees transferred from one classification to another classification, by job bid or promotion shall transfer their seniority to the new classification after twenty (20) working days on the job to which they had bid or transferred, provided it is the last classification to which they have bid or have been promoted. An employee thus transferred shall serve a trial period of not less than one working day and not more than twenty (20) working days, which period may be extended by mutual agreement. In cases covered by the above employees will be allowed to wash themselves out during the trial period (on the job to which they had bid or been promoted) by giving notice to the Company not later than the twentieth (20th) day, provided they had not previously held the classification in the previous two (2) years.

51. Employees who wash themselves out as above specified or who are washed out by the Company shall be entitled to return to their former job classification with full seniority. If there have been other personnel moves which have resulted from their bid or promotion, the employees involved will be returned to their former job classifications (to the extent that this is necessary in order to accommodate the washout) with full seniority, and the Company will be entitled to postpone the reverse moves caused by the washout until all resulting personnel moves may be accomplished without the necessity of paying premium pay.

52. Employees who are transferred in lieu of layoff will immediately transfer their seniority to the new classification.

53. Decrease in Forces. When a reduction in force is necessary, forces shall be reduced in the following manner: (Subject to the exceptions in Article XI, Par. 111).

54. The Company will allow in certain situations for a voluntary layoff to occur. If this happens, the following guidelines will apply on a seniority basis:

a) The voluntary layoff period will be for a maximum of four (4) weeks. This time period may be extended when the Company, Union and an employee

mutually agree.

b) The voluntary layoff option will be made available to those Employees in the classification whose work assignments are being immediately affected by the reduction. No employee on voluntary layoff will be allowed to exercise their seniority in any classification.

c) When it is determined that a recall is needed, the person who went out on involuntary layoff would be recalled prior to a person who volunteered.

d) If it is determined that production needs change and all other options have been exhausted, the Company would have the option to recall a person on voluntary layoff.

e) Upon return from voluntary layoff the employee will return to his/her previous classification and shift.

f) During a voluntary layoff, a person would retain their Insurance consistent with the Insurance Agreement in the contract.

g) In the event there are insufficient volunteers for a required layoff, the procedures prescribed in this article concerning decreases in forces will apply.

55. (1) Probationary employees will be the first to be displaced from the classification(s) to be reduced; (2) Next, employees who have not acquired seniority in the classification as provided in Par. 50 shall be displaced from the classification(s) to be reduced and shall be returned to the classification in which they still hold seniority. (Employees who have been transferred into the classification pursuant to Par. 56 shall be excepted from this group and shall be considered on the basis of their total seniority as part of the group considered in subparagraph (3) hereof). (3) Next, employees will be displaced from such classification(s) on the basis of their seniority in the classification, on the basis of the factors in Par. 48.

56. Employees who are displaced from their regular classification shall be offered a job opportunity in a vacant job or in a job held by an employee with less seniority, as follows:

(1) To a job classification for which the employee is fully qualified by previous classification and satisfactory performance in the job classification for the Company, or

(2) To a job classification for which the employee qualifies under the factors set forth in Par. 48, without any training period.

57. Employees displaced in the above process shall be considered on the same basis as specified in Par. 55 hereof for reduction of forces in a classification. Such employees who are displaced in this process shall be given a similar opportunity. Employees who are displaced under the above procedure and who do not have sufficient seniority and qualification to secure another job under the above procedure shall be laid off from the Company.

58. In the event of partial or complete shutdown of manufacturing operations during straight-time hours for the purpose of taking inventory, seniority by shift shall apply only among employees in the same job classification doing the same type of work. Employees performing such work will be paid at their classification rate. During overtime hours for the purpose of taking inventory, the Appendix “C” Overtime Distribution Agreement shall apply.

59. Employees who have completed their probationary period and who are scheduled for a layoff for a period exceeding three (3) working days, shall be notified at least three (3) working days prior to such layoff. The Union shall be notified as soon as practicable after the Company

makes the determination to lay off employees. In the event an employee is temporarily laid off for a period of not more than three (3) working days, due to lack of work or other legitimate causes, the employee with the least continuous service in the classification affected shall be laid off.

60. Employees may elect layoff instead of exercising their seniority rights to displace a less senior employee in a different classification. (The Company will provide the employee and Union with a list of the different classifications that have less senior employees.) Employees electing layoff under this paragraph will only be eligible for recall to their regular assigned classification or to such other classifications as they designate in writing to Human Resources at the time of layoff. Such employees shall be notified by certified mail that their rights are due to expire. Such notice will state that they must accept the next recall for which they are eligible or terminate their seniority and all employment rights. In no event shall the employee’s seniority be extended for a period greater than that specified in 62(E). The president of the local union shall appoint two (2) committee members to be present in the Layoff & Recall meeting prior to notice being given to employees of such Layoff or Recall. Only one (1) of the appointed members may be present at the meeting with the employees.

61. Recall to occur as follows:

I. When increasing the workforce in an area without adding to the overall plant headcount, both shift preference and recalls, direct and indirect, will be honored based on seniority. If the position is not filled through this process, then the position will be posted.

II. Opening occurs in classification that has employees on layoff and most senior person on layoff is from the classification that is being recalled.

A. The person with the most seniority with the Company shall be recalled by telephone or certified mail.

B. The person recalled is expected to advise the Company of their availability for recall upon contact by telephone, or if unable to be contacted by telephone, shall have forty-eight (48) hours after sending certified mail to notify the Company of their availability for work and must report for work not later than the beginning of their shift on the third working day following the day the notice to report was sent.

(1) In the event the employee does not accept recall or fails to report for work, their seniority and all employment rights will be terminated.

III. Opening occurs in classification that has employees on layoff. However, there are more senior employees on layoff from other classifications.

A. The Company shall recall the most senior person, regardless of their classification, who are fully qualified to perform the work of that classification by:

(1) Previous classification and satisfactory performance in the job classification for the Company, or

(2) Under the factors set forth in Paragraph 48, Article VI of the Basic Agreement, without any training period.

B. The person recalled is expected to advise the Company of their availability for recall upon contact by telephone, or if unable to be contacted by telephone, shall have forty-

eight (48) hours after sending certified mail to notify the Company of their availability for work and must report for work not later than the beginning of their shift on the third working day following the day the notice to report was sent.

In the event the employee does not accept recall or fails to report for work, their seniority and all employment rights will be terminated.

IV. Opening occurs in classification that has no employees on layoff. However, there are employees on layoff from other classifications.

A. That job shall be posted in accordance with Article VI, Par. 69 of the Basic Agreement.

B. After job posting and selection procedures have occurred, persons on layoff will be recalled to the job vacancy that would then exist in accordance with Part I and Part II, if applicable. If Part I and Part II are not applicable, persons will be recalled in accordance with length of continuous service, physical fitness and ability to perform the work, without any training period.

C. The person recalled is expected to advise the Company of their availability for recall upon contact by telephone, or if unable to be contacted by telephone, shall have forty-eight (48) hours after sending certified mail to notify the Company of their availability for work and must report for work not later than the beginning of their shift on the third working day following the day the notice to report was sent.

In the event the employee does not accept recall or fails to report for work, their seniority and all employment rights will be terminated.

NOTE: Employee’s recalled from layoff who are unable to return to work due to medical reasons shall be placed on medical leave of absence provided the employee accepts the recall.

62. Loss of Seniority. Continuous service as outlined in this Article shall be broken and employees shall not be considered as having any length of continuous service or any employment relationship whatsoever with the Company:

(A) If they shall quit;

(B) If they shall have been discharged for proper cause;

(C) If they fail to report for work, or make satisfactory explanation of such failure within forty-eight (48) hours after notification has been sent to report for work by certified mail, one copy of such notification being tendered to the Union Committee. Such notice shall not be sent unless such employee has been absent and has failed to notify the Company by the middle of the employee’s shift on the second consecutive working day of the reason for such absence, or;

(D) If they fail to report on schedule following a vacation or an authorized leave of absence without giving a reasonable excuse (employees who present an excuse for such absence will be permitted to work after the presentation of the excuse until such time as the Company decides whether to honor the excuse as an exception to the rule) or;

(E) If they shall have been absent from the service of the Company for any reason (except for a leave of absence for military service) for a period of three (3) years, where such employee has

been continuously employed for over ninety (90) calendar days and not over three (3) years shall be considered as having lost their seniority and employment relationship if they have been absent from the service of the Company for a period equal to their length of service with the Company. Absence due to a compensable disability incurred during the course of employment shall not break continuous service provided such individual is returned to work within thirty (30) days after final payment of statutory compensation for such disability, or after the end of the period used in calculating a lump sum payment.

63. Probationary Period. A new employee, and others re-employed following a break in continuous service, as outlined in Par. 62 above, will acquire seniority after they have completed ninety (90) calendar days of employment, exclusive of any periods of absence due to medical reasons of five or more consecutive days, from the date of their employment or re-employment with the Company. Such employees shall be considered probationary employees until they have acquired seniority. There shall be no responsibility for the re-employment of probationary employees if they are laid off or discharged during this period. Probationary employees may file and process grievances after thirty (30) calendar days from date of employment or re-employment but may be laid off or discharged during their probationary period as exclusively determined by Management.

64. Information to the Union. Every three months the Company shall furnish the Union with copies of a seniority list and post copies on the bulletin boards of the Company. Once each month between the quarterly lists, the Company will furnish the Union one copy of an updated seniority listing. The company will also continue to provide the union with an updated list of shift preferences and recalls periodically.

(A) No more than once per month, at the request of the union, the Company will provide a list of hires, terminations, promotions, transfers and seniority of bargaining unit employees during the preceding calendar month

(B) The Company will continue to provide the Union with copies of written leave of absence forms, written disciplines, names of employees who are to be laid off or who have been recalled (including the date of notice and the name of the job classification involved), “employee record change requests” and notices that appear on Company bulletin boards that pertain to the bargaining unit. The Company will transmit this information within two (2) weeks after the action is taken or, in the case of leave of absence, within one (1) week after the form is completed. Inadvertent failure to transmit the information or failure of the Union to receive it shall not invalidate the action involved, since the purpose of this provision is only to keep the Union informed. Errors shall be corrected when discovered.

65. Shift/Job Transfers. Employees who have completed their probationary period who desire to change shifts or jobs shall indicate their preference on a form provided by the Company. When a vacancy occurs in a classification, an employee performing the same type of work in the classification, with a written preference form on file, shall be given preference based on their seniority for transfer where the vacancy exits, subject to the following conditions.

(A) In the event it is not possible to transfer the employee in accordance with their preference due to there not being an adequately qualified crew on the shift from which the transfer is to be made, the transfer will be made as quickly as possible.

(B) The Company shall have the right to train new employees to the classification on the day shift for a period of not to exceed thirty (30) working days (except that such period may be

extended by agreement of the parties), and any transfers shall not take place until this training is completed.

(C) In the event an employee is promoted in a classification, the employee thus promoted will remain on the same shift and area unless there is a more senior employee in the classification where the promotion occurs with a preference form on file. If this should occur the two employees will exchange places.

(D) In the event the Company decides to decrease the number of employees in a classification on a shift and increase the number of employees in the same classification on another shift within the same area, the Company will utilize this Paragraph to achieve the necessary results. If openings exist after all preferences have been utilized, the least senior employees (being decreased) will be transferred and shall exercise their seniority rights regardless of shift or area. All employees (direct or indirect) may utilize their seniority to bump a less senior employee, and shall not be required to remain within their classification.

66. Employees granted a preference change under this paragraph to their first choice shall not be entitled to a preference change for a period of one hundred twenty (120) days. Employees granted their second choice will continue to have their first choice on file unless changed by Paragraph 67.

67. Employees may withdraw or change their written preference at any time. However, the preference form on file before Wednesday of any work week shall govern any changes to be effective in the following work week and thereafter unless changed by subsequent preference form. In the event of a reduction or recall from layoff in the work force in any department or shift, the Company will notify the Union of these reductions or recalls at which time the preferences shall be frozen effective midnight the day immediately preceding such notice. They shall remain frozen until the displacements resulting from such reductions or recalls are complete.

68. Temporary Transfer. Vacancies of 45 days or less in a classification shall be considered as temporary. The Company may fill such temporary vacancies as follows. Employees farmed into a classification on any one shift will be considered one occurrence. The Company shall not exceed 45 occurrences in any individual classification in a 120 day period. Job vacancies in excess of 45 days may also be considered temporary such as the case where the vacancy is due to an employee being on leave of absence due to occupational accidents and certified illness.

69. Job Posting. When a vacancy occurs or is expected to occur, (other than a temporary vacancy), which has not been filled either by promotion, preference form or recall from layoff, the Company shall, to the greatest degree practicable, post the job vacancy on bulletin boards throughout the Company for a period of two (2) working days. Such posting will include the job title, the location of the job, the pay rate, the shift, and the job description.

70. Non-probationary employees desiring such job shall apply for the job on a form prescribed by the Company. The employee selected by the Company (such selection governed by Par. 48 of this Article) shall be given a trial period of not less than one working day and not more than twenty (20) working days, which period may be extended by mutual agreement. If it is determined by the Company that they are not satisfactorily performing the job, or if employees wash themselves out pursuant to the terms of Article VI, Par. 50, they shall be returned to their former classification and the Company shall continue to make selections by seniority from the bidders and again provide a trial period under the same procedure. If the next employee is washed out by the Company or washes out pursuant to the terms of Article VI, Par.50, the Company after

exhausting all bidders may recruit from any available source. Upon bidding the job and being selected, the employee will not be entitled to bid on another permanent job opening for a period of six (6) months, except in the event the employee is not on the job they obtained through bidding due to a decrease in forces as set forth in Par. 53.

71. An employee may withdraw a bid within one (1) working day after bids have been closed by giving written notice to Human Resources or their supervisor. An employee withdrawing a bid in a timely manner and/or an employee who is washed out by the Company during the trial period shall not be subject to a bidding bar.

72. An eligible bidder shall be placed on their job within ten (10) working days after their selection. Such ten (10) day period may be extended by mutual agreement between the Company and Union.

73. A list of successful bidders shall be posted following the week in which the selections are made. If posted jobs are not filled, and if the vacancy still exists, the Company shall re-post the position within thirty (30) days.

74. An employee promoted from the bargaining unit may be returned but once by the Company to the bargaining unit, provided such option is exercised by the Company not later than six months after such promotion. Upon their return, the employee will be credited with the amount of accumulated seniority they had as of the date of their promotion from the bargaining unit, and shall immediately resume the accumulation of seniority.

ARTICLE VII

Military Service

75. The Company shall accord to each employee who applies for re-employment after conclusion of military service with the United States such re-employment rights as they shall be entitled to under then existing statutes. If the position of such employee has been eliminated, the Company will use every reasonable effort to provide for the employee employment for which they can satisfactorily qualify.

ARTICLE VIII

Leave of Absence

76. The Company, in cases where production requirements permit or unusual circumstances warrant, may grant, at its discretion, a leave of absence upon written request made in the form prescribed by the Company and upon good cause being shown for such leave for a definite period of not more than eight (8) weeks. Additional leave may be granted in writing upon written request where deemed justified, but in any event, no succession of leaves shall extend beyond one (1) year; provided that in exceptional cases of extended absence because of illness or accident a longer leave of absence may be granted at the Company’s discretion.

77. Up to three (3) employees at any one time (unless otherwise mutually agreed), as designated by the Union, may request leave from the Company to serve as a delegate to a union convention or for other official union business or training. Whenever possible, the Company will be provided at least thirty days advance notice of any such leave. Notice given less than 30 days in advance of a leave will not be unreasonably denied. There shall be no deduction from

“continuous service” (under this Agreement or the Pension Agreement) for leaves granted under this Paragraph.

78. Any employee (not exceeding three in number at any one time) selected by the Union to act as a full-time official representative will be given a leave of absence by the Company for the duration of such office. There shall be no deduction from “continuous service” (under this Agreement or the Pension Agreement) for the first twelve (12) months (accumulative) of leave(s) of absence granted under this paragraph. After the first twelve (12) months of leave(s) of absence under this paragraph, “continuous service” will be frozen for the duration of such leave(s).

79. Pregnancy shall be treated the same as any other total or temporary disability and leave of absence under the terms of this agreement.

80. In the event an employee on leave of absence accepts substitute gainful employment or self-employment without the prior consent of the Company, their leave shall automatically be considered cancelled and employment terminated without recourse, except in the following cases:

(A) As an official representative of the Union, or

(B) In some section of the United States (other than Winnebago County, Illinois, or Rock County, Wisconsin), where such employee is residing temporarily because the illness of a member of their immediate family.

81. An employee who is called for jury service shall be excused from work for the days on which they serve and they shall receive, for each day of such service on which they otherwise would have worked, the difference between eight (8) times their classification rate (plus shift premium and supper pay if applicable) and the payment they receive for jury service. The employee will present proof of such service and the amount of pay received therefor. An employee who is subpoenaed for court appearance and is not the plaintiff or defendant shall be excused from work for the court appearance and shall be paid for each day lost for which they otherwise would have worked in the same manner as provided for jury service, above. The employee will present proof of such appearance and the amount of any pay received therefor.

ARTICLE IX

Adjustment of Grievances

82. It is agreed that the Union will establish a Shop Committee from employees in the bargaining unit to meet with representatives of the Management for the purpose of presenting and participating in the adjustment of grievances, and, when established, shall furnish the Company with the names of the Committee members.

83. Such committee shall consist of three (3) members from the day shift and one (1) members each from the second and third shifts, provided there are at least ten (10) or more employees for each committee member on the second and third shifts. An additional committee member will be added at such time, and for as long as, the bargaining unit exceeds 200 employees. Thereafter, an additional committee member will be designated for every 100 employees added to the bargaining unit.

84. The Company shall recognize alternates appointed to fill a vacancy caused by the vacation or leave of absence of a committee member, and such alternate shall be allowed to

attend regular monthly union meetings if they so request.

85. At such time as the entire committee is absent from the plant due to Labor Contract negotiations, two (2) alternate committee members per shift affected may be appointed by the Union and shall be recognized by the Company.

86. Should any difference or dispute arise between the Company and its employee(s) concerning the meaning and application of the provisions of this Agreement, (or should the Union contend that the Company has violated its obligations under the Agreement to the Union, as such) an earnest effort shall be made to settle the difference orally. This oral effort shall be made by the aggrieved employee (or in the case of a breach of obligation to the Union, as such, by a committee member) and/or not to exceed two committee members at the option of the employee. If the matter is not resolved orally, it shall be taken up in the following manner:

87. FIRST: In writing to the supervisor involved. A meeting shall be held within one (1) working day after receipt of the written grievance. The Company will normally be represented at this meeting by the supervisors involved, provided that the Company may designate alternate or additional First Step Representatives in appropriate cases. The Union will be represented by the grievant and up to two (2) shop committee members. The written grievance shall be answered by one of the Company First Step Representative within two (2) working days after the first step meeting. If the answer is not satisfactory the grievance shall be appealed to the next step by the Union within four (4) working days of the written answer.

88. SECOND: Second step meetings will be held within (7) calendar days of the Union’s request unless otherwise mutually agreed. The Company shall make its written answer within seven (7) working days after the meeting at which the grievance is discussed. If the answer is not satisfactory, the grievance shall be appealed to the next step by the Union within ten (10) working days of the written answer.

89. THIRD: Between an International Representative of the Union, the Local Union President and/or the two Chairpersons of the Shop Committee and the Managers of the Company and/or other Company Representatives at a regular or special meeting. One or more witnesses may be called into the meeting by agreement of the parties. The Company shall make its written answer within ten (10) working days after the third step meeting in which the grievance is discussed.

90. FOURTH: If the Union is not satisfied with the third step answer of the Company, it may, within thirty (30) calendar days of the date of the answer give notice of its intention to refer the grievance to arbitration. (If the Company fails to give an answer within the time limit prescribed at Step Three, the Union may elect to treat the grievance as having been denied and may give notice of its intent to refer the matter to arbitration.) After such notice is given, the Company and the Union will attempt to agree upon an impartial arbitrator. If no agreement is reached within thirty (30) calendar days thereafter the Federal Mediation and Conciliation Service (FMCS) will thereafter be asked to submit a panel of seven (7) arbitrators to the parties. The parties shall, upon receipt of said panel, strike names alternately until one (1) name remains on the panel; this remaining person shall serve as the impartial arbitrator. The arbitrator shall have jurisdiction and authority only to interpret, apply, or determine compliance with the provisions of this agreement insofar as shall be necessary to the determination of grievances appealed to the arbitrator. The arbitrator shall not have jurisdiction or authority to add to, detract from or alter in any way the provisions of this Agreement.

91. Each party shall assume its own expenses in connection with arbitration, and the fee of the arbitrator shall be paid by the two (2) parties, one-half (1/2) by each.

92. Grievances reduced to writing shall be dated and signed by the aggrieved employee(s) or their Shop Committee Member, except that grievances relating to more than two (2) employees shall be signed by at least two (2) aggrieved employees and the Shop Committee Member for the area(s) involved. All answers by the Company and all appeals by the Union shall be in writing, dated and signed by the Company or Union representative involved.

93. In the event an employee dies, the Union may process on behalf of their legal heirs any claim they would have had relating to any monies due under the provisions of this Agreement.

94. Grievances settled shall be signed off by a Shop Committee Member and/or International Representative.

95. Written grievances and appeals shall be answered by the Company Representative or their designee within the time limit fixed therein or the Union may pass the grievance to the next step, except that in Step 2, if the Company fails to answer within the time limits fixed therein it shall be considered adjudicated in favor of the employee. Grievances not appealed within the specified time limits shall not be eligible for further appeal. All time limits in this Article may be extended with the written consent of the other party.

96. Meetings between the International Representative of the Union, the Local Union President and/or the two Chairpersons of the Shop Committee or their alternates, and Managers of the Company and/or other Company Representatives provided for in the third step of the grievance procedure, shall be held at least once each month, prior to the fifteenth (15th) of the month to consider all grievance appeals submitted during the preceding month. Special meetings will be arranged on a date and at a time mutually satisfactory in regard to difficulties which may arise and which need immediate attention.

97. Members of the Shop Committee will be afforded time off at their classification rate for the purpose of attending meetings with the Company pursuant to the first three steps of the grievance procedure. A member of the Shop Committee shall also be allowed time off when necessary at their classification rate, to aid in the settlement of grievances in the area which they represent. A committee member on Union activity shall obtain permission from their supervisor (which shall not be unreasonably denied) and properly record their absence prior to leaving their work station to conduct these activities; shall report their presence and their purpose to the supervisor of the department in which they wish to conduct this activity; and shall report their return to their supervisor at the conclusion of this activity. Members of the Shop Committee shall do their utmost to see that their absence from their work station due to handling of grievances shall be as little as practicable and shall do their utmost to see that their absence from the work station does not interfere with production. Company paid time under this section is limited to a weekly maximum of the sum of seven (7) hours times the number of active committee members (“the pool”). All time used by the committee members will be deducted from the pool. Unused hours will not be carried over from week to week.

98. All grievances must be presented promptly and not later than thirty (30) days after the cause of the grievance arises unless the circumstances of the case made it impossible for the employee or the Union to know that they had grounds for such claim prior to that date, in which case the retroactivity shall not exceed thirty (30) days prior to the date the grievance was filed in writing. Grievances involving discharge must be presented within three (3) working days of the

action (subject to Par. 102). Grievances alleging improper layoff must be presented within two (2) working days of the Company notice to the employee of this intended layoff or there shall be no retroactivity prior to the date of the grievance.

99. Grievances alleging improper recall must be presented within two (2) working days after notice is given to the employee (at the address last given by them to the Human Resources Department) that a less senior employee was recalled to a job classification to which they were entitled, or there shall be no retroactivity prior to the date of the grievance. In cases of retroactivity the employee will be paid at the rate of the job classification to which they were entitled.

100. The Grievance Committee of the Union shall be notified and given a list of all employees scheduled for layoff or recall prior to such layoff or recall taking place. The layoff list proposed by the Company shall not become final until one working day after the Union has been provided with the list.

101. The assignment of Shop Committee Members to their respective plant areas shall be a matter of full knowledge to both the Union and the Company immediately. It is further agreed, for the purpose of prompt settlement of grievances, that, where necessary, committee members will handle grievances without restriction as to area.

102. Under the provisions of this Agreement, no employee, after their probationary period provided in Par. 63 of Article VI, Seniority, shall be discharged or given a disciplinary layoff in excess of five (5) days, without first being suspended. Such initial suspension shall be for not more than five (5) working days. During this period of initial suspension, the employee may, if they believe that they have been unjustly dealt with, request a hearing and a statement of the offense before their supervisor or their superintendent or the Human Resources Department Representative, with a Grievance Committee member or the plant committee present if they so desire. At such hearing, the facts concerning the case shall be made available to both parties. After such hearing or if no such hearing is requested, the management may conclude whether the suspension shall be converted into discharge or disciplinary layoff, or dependent upon the facts of the case, whether such suspension shall be extended, or revoked, or modified or affirmed. If the suspension is revoked, the employee shall be returned to employment and made whole in the absence of mutual agreement to the contrary; but in the event a disposition shall result in the affirmation, extension or modification of the suspension, or in the discharge of the employee, the employee may within three (3) working days after such disposition allege a grievance in writing on a regular grievance form which shall be handled in accordance with the procedure outlined in this Article, beginning with Step Two. Should any employee as a result of this grievance, have their discipline or discharge revoked, they shall be returned to work and made whole. In the event of arbitration the arbitrator shall determine what, if any, substitute earnings or compensation are to be offset.

103. Where discipline of an employee is involved or there is a dispute as to the correctness of an employee’s record of absence/tardiness, an employee or (with the employee’s permission) their Shop Committee Member may review their record of absence/tardiness in the presence of a supervisor.

ARTICLE X

Bulletin Boards

104. The Company agrees to provide up to two (2) glassed in bulletin boards with locks to be placed at the South Beloit plant which may be used exclusively by the Union for posting notices signed by the Union Secretary or the President of the Local Union and restricted to:

1. Notices of Union recreational and social affairs.

2. Notices of Union appointments and results of Union elections.

3. Notices of Union meetings.

4. Notices of Union elections.

5. Notices, which shall be non-controversial in nature, approved by Company Representatives.

105. It is agreed that the Company may remove any notice which is not in accordance with the above restrictions.

ARTICLE XI

Wages

106. New and/or changed jobs shall be described and classified in accordance with the National Position Evaluation Program, which may be modified as necessary by mutual agreement. The new or changed description and classification shall then be submitted to the job evaluation committee and, if agreed to, shall then be established. If no agreement is reached, the Company may place the description and classification in effect, after which a grievance may be filed at any time within the next thirty (30) days, contending that the job has been improperly described and/or classified.

107. Job evaluation points assigned to a job classification shall be changed only when it has been established that there have been changes in the job content or by mutual agreement.

108. The standard hourly wage schedule of rates for the respective job classes set forth in Appendix “A” shall become effective and shall remain in full force and effect for the duration of this Agreement. A schedule of jobs in each job class is also included in Appendix “A.” Appendix “A” constitutes the minimum rates of pay for the applicable job classification (direct and indirect as applicable) and are incorporated by reference and are fully made a part of this Agreement.

109. Employees hired on or after January 30, 2005 for all job classifications, other than Assembler and Material Handler, shall serve a progression period and will be paid in the following manner:

A) For their first six months of service, employees will be paid 20% less than their classification rate.

B) For their second six months of service, employees will be paid 15% less than their classification rate.

C) For their third six months of service, employees will be paid 10% less than their classification rate.

D) For their fourth six months of service, employees will be paid 5% less than their classification rate.

E) After 24 months of service, employees will be paid their respective classification rate.

Employees hired on or after January 30, 2005 under the new hire rate progression shall be paid the progression rate for their classification as shown in Appendix A for all overtime hours worked in their overtime group.

For purposes of this Paragraph 109 employees working in progression under A, B, C, or D must work not less than eighteen (18) of the working days available during each 6 months calendar period to qualify towards the next labor grade increase. In the case of an employee working in progression under A, B, C, or D of this Paragraph 109 who are placed on leave of absence for any reason, the eighteen (18) working day rule shall not apply during the progression of B, C, or D. Holidays shall be considered as days worked. Nothing in this paragraph shall require the payment of a rate higher than the rate of the job classification to which the employee is assigned.

110. It is understood and agreed that nothing contained in this Article shall prevent the Company from paying a present employee or a new employee the rate of the job classification to which they are transferred or assigned, provided they are qualified and able to perform the work satisfactorily.

111. When a reduction of employees occurs in a classification or in the Company, an employee who has attained a classification above the lowest grade in an occupational group (see Appendix D) shall not be reduced in rate as long as they are retained at work within that occupational group. Such rate retention shall also apply in the event such an employee is recalled to the occupational group from a job classification outside of the occupational group or from layoff out of the plant.

112. An employee wishing to be reduced in classification within an occupational group may exercise this right but once and only in the event there is a posted opening.

113. When an employee is transferred to a classification outside their occupational group in lieu of layoff, they shall receive the rate of the classification to which they are assigned.

114. Indirect. When an indirect employee is temporarily assigned to another indirect job classification outside their own occupational group, they shall be paid on the basis of either the indirect rate of their regular job classification or the indirect rate of the classification to which they are assigned, whichever is greater. When an indirect employee is temporarily assigned to a direct job classification outside their own occupational group, they shall be paid the higher of the rate of their regular job classification or the rate of the job classification to which they are assigned.

Direct. When a direct employee is temporarily assigned to another direct job classification outside their own occupational group, they shall be paid the higher of the direct rate of their regular job classification or the direct rate of the job classification to which they are assigned. An employee who is classified in a direct labor classification and who is temporarily transferred to an indirect labor classification, other than pursuant to Article VI, shall be paid either the rate of their regular classification or the rate of the classification to which they are assigned, whichever is greater.

Employees hired on or after January 28, 1984, who are working under the new hire rate progression, will be paid the appropriate rate provided for in this paragraph when temporarily transferred, reduced to the applicable rate based upon their time in the new hire rate progression.

115. No employee shall be temporarily transferred to another classification outside their occupational group (unless they consent) if there is an employee from another occupational group working in the group and shift and in the Operation to which they are regularly assigned; provided that this limitation shall not apply when an employee has been temporarily transferred out of the occupational group because of disability or their own request.

116. It is agreed that a shift differential shall be paid to an employee regularly assigned to other than the day shift as follows: an employee who works four or more hours after 3:00 p.m. and before 11:00 p.m. shall receive a differential of fifteen cents per hour for each hour worked; an employee who works four or more hours after 11:00 p.m. and before 7:00 a.m. shall receive a differential of twenty cents per hour for each hour worked. An employee regularly assigned to the first shift shall not receive a shift differential for overtime work. No change in method of shift differential pay will be made for an employee temporarily transferred from one shift to another for a period not exceeding one day. If such transfer exceeds one day, the shift differential shall be, or shall not be, paid in accordance with the provisions of this Paragraph relating to the shift on which they are temporarily working.

117. The one-half hour paid lunch period shall continue to be paid to employees regularly assigned to the second and third shifts. This lunch payment will be owed to the following categories of employees.

(1) Employees regularly assigned to the second or third shift who work four (4) hours or more between the hours of 3:00 p.m. and 7:00 a.m.

(2) Employees regularly assigned to the second or third shift who work six (6) hours or more after 11:00 a.m. on Saturday or Sunday.

(3) Employees regularly assigned to the first shift who work four (4) hours or more between the hours of 3:00 p.m. and 7:00 a.m. on Saturday or Sunday, or six (6) hours or more after 11:00 a.m. on Saturday or Sunday.

(4) Direct employees who are temporarily transferred to an indirect classification for the entire work shift shall receive the one-half hour paid lunch period at the applicable rate.

Saturday and Sunday shall be as defined in Article IV, Par. 24.

118. In the event the work of a job classification as set forth in Appendix “A” is discontinued or becomes inoperative, the Union will be immediately notified of the reason thereof. Such notification does not preclude the filing of a grievance should any disagreement arise between the parties.

119. Pay Adjustments and Corrections. Where a “retro” adjustment involves a deduction from the employee’s pay, no more than $50 will be deducted from any one check. In the case of gross errors the $50 maximum will not apply and other arrangements will be made.

ARTICLE XII

Cost-of-Living

120. For the term of this contract, the cost-of-living provisions will be frozen.

121. (A) Except as set forth below in sub-paragraph (C)(3) and (4), all cost-of-living adjustments provided in this Article shall be accumulated in a cost-of-living float which shall be an “add-on,” and shall not be part of an employee’s classification rate. Such adjustments shall be payable only for clock hours actually worked and for reporting allowances and shall be included in the calculation of overtime premium, but, except as provided below, shall not be part of the employee’s pay for any other purpose and shall not be used in calculation of any other pay, allowance, or benefit. Cost-of-living adjustments will be included in the calculation of holiday pay as defined in paragraph 31 of this Agreement. Vacation pay in any year will be calculated from the prior year’s earnings as stated on the Wage and Tax Statement (Form W2) in accordance with paragraph 37 of the Agreement.

122. (B) The United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index for Urban Wage Earners and Clerical Workers - C.P.I. - W U.S. City Average: All items 1982-84 = 100 shall be used as the basis for cost-of-living adjustments provided for in sections (C), (D) and (E) below. Such index shall be referred to as the “BLS-CPI.”

123. (C)(1) During the calendar year 1999, there shall be four (4) cost-of-living adjustment dates: February 1, 1999, May 1, 1999, August 1, 1999, and November 1, 1999.

(2) The cost-of-living adjustment added to the cost-of-living float on such date (if a Monday) or on the first Monday following such 1999 adjustment dates, if any, will be an adjustment of one cent ($.01) for each full four-tenths (.4) points movement in the BLS-CPI index figures (after the six cent [$.06] “set off” or “corridor” set forth in [C] [3] below) based upon the following calculation months for the following 1999 adjustment dates:

February 1, 1999 – Subtract September, 1998 index figure from the December, 1998 index figure.

May 1, 1999 – Subtract December, 1998 index figure from the March, 1999 index figure.

August 1, 1999 – Subtract the March, 1999 index figure from the June, 1999 index figure.

November 1, 1999 – Subtract the June, 1999 index figure from the September, 1999 index figure.

If the calculation for any quarterly adjustment when dividing four-tenths (.4) into the applicable BLS-CPI index change between calculation month indexes results in tenths of the index left over, such tenths will be carried over into the BLS-CPI index change between the calculation month indexes for the next quarterly adjustment.

(3) The first six cents ($.06) which the above formula would otherwise generate for 1999 cost-of-living adjustments on the 1999 adjustment dates will not be paid in any form. No 1999 cost-of-living adjustments will be added to the cost-of-living float until the first six cents ($.06) which the application of the formula would produce has been exceeded and then only the amount generated in excess of six cents ($.06) shall be added to the cost-of-living float.

124. (D) (1) During the calendar year 2000, there shall be four (4) cost-of-living adjustment dates: February 1, 2000, May 1,2000, August 1, 2000, and November 1, 2000.

(2) The cost-of-living adjustment added to the cost-of-living float on such date (if a Monday) or on the first Monday following such 2000 adjustment dates, if any, will be an adjustment of one cent ($.01) for each full four-tenths (.4) points movement in the BLS-CPI index figures (after the six cent ($.06) “set off” or “corridor” set forth in (D) (3) below based upon the following calculation months for the following 2000 adjustment dates:

February 1, 2000 – Subtract the September, 1999 index figure from the December, 1999 index figure.

May 1, 2000 – Subtract the December, 1999 index figure from the March, 2000 index figure.

August 1, 2000 – Subtract the March, 2000 index figure from the June, 2000 index figure.

November 1, 2000 – Subtract the June, 2000 index figure from the September, 2000 index figure.

(3) The first six cents ($.06) which the above formula would otherwise generate for 2000 cost-of-living adjustments on the 2000 adjustment dates will not be paid in any form. No 2000 cost-of-living adjustments will be added to the cost-of-living float until the first six cents ($.06) which the application of the formula would produce has been exceeded and then only the amount generated in excess of six cents ($.06) shall be added to the cost-of-living float.

125. (E) (1) During the calendar year 2001, there shall be four (4) cost-of-living adjustment dates: February 1, 2001, May 1, 2001, August 1, 2001, and November 1, 2001.

(2) The cost-of-living adjustment added to the cost-of-living float on such date (if a Monday) or on the first Monday following such 2001 adjustment dates, if any, will be an adjustment of one cent ($.01) for each full four-tenths (.4) points movement in the BLS-CPI index figures (after the three cent ($.03) “set off” or “corridor” set forth in (E) (3) below) based upon the following calculation months for the following 2001 adjustment dates:

February 1, 2001 – Subtract September, 2000 index figure from the December, 2000 index figure.

May 1, 2001 – Subtract December, 2000 index figure from the March, 2001 index figure.

August 1, 2001 – Subtract the March, 2001 index figure from the June, 2001 index figure.

November 1, 2001 – Subtract the June, 2001 index figure from the September, 2001 index figure.

If the calculation for any quarterly adjustment when dividing four-tenths (.4) into the applicable BLS-CPI index change between the calculation month indexes results in tenths of the index left over, such tenths will be carried over into the BLS-CPI index change between the calculation month indexes for the next quarterly adjustment.

(3) The first three cents ($.03) which the above formula would otherwise generate for 2001 cost-of-living adjustments on the 2001 adjustment dates will not be paid in any form. No 2001 cost-of-living adjustments will be added to the cost-of-living float until the first three cents ($.03) which the application of the formula would produce has been exceeded and then only the amount generated in excess of three cents ($.03) shall be added to the cost-of-living float.

126. (F) In no event will a reduction of the BLS-CPI and the application of the formulas set forth in Subsection (C), (D) and (E) provide the basis for a reduction of an employee’s base rate and such reduction shall reduce the cost-of-living “add on” only to the extent of the amount accumulated in the cost-of-living float for the quarter or quarters involved.

127. (G) No adjustments, retroactive or otherwise, shall be made due to any revision which may later be made in the published BLS-CPI index for any month or months specified in Subsections (C), (D) and (E) above.

128. (H) Should the BLS-CPI, in its present form and on the same basis (including composition of the “Market Basket” and Consumer Sample) as the last index published prior to January 1, 1999 become unavailable, the parties shall attempt to adjust this Article or, if agreement is not reached, request the Bureau of Labor Statistics to provide the appropriate conversion or adjustment which shall be applicable thereafter. The purpose of such conversion

shall be to produce as nearly as possible the same result as would have been achieved using the BLS-CPI in its present form.

129. (I) In the event the Bureau of Labor Statistics does not issue the Consumer Price Index on or before the beginning of the pay periods referred to above, any adjustments required will be made at the beginning of the first pay period after receipt of the Index.

ARTICLE XIII

Safety and Health

130. The Company and the Union will cooperate in the objective of eliminating accidents and health hazards. The Company shall continue to make reasonable provisions for the safety and health of its employees at the plants during the hours of their employment. The Company, the Union and the employees recognize their obligations and/or rights under existing federal and state laws with respect to safety and health matters.

131. Protective devices and safety apparel necessary to properly protect employees from injuries shall be provided by the Company. Complaints concerning inadequate heating and/or ventilation will be given prompt and due consideration.

132. The Company will request a physical examination of each and every new employee hired before they report for work. They may from time to time request a physical examination of employees now on the payroll of the Company. It is expressly understood and agreed that any physical examination of employees on the payroll shall be made at the Company’s expense and shall not be done for the express purpose of separating the employee from the payroll of the Company.

133. Employees injured at work who, upon direction of the Company approved medical provider or facility, are unable to complete their shift shall be paid at their classification rate for the difference between the hours actually worked on that day and

1) On Monday through Friday, the hours they were actually scheduled to work that day, but not more than eleven; or

(2) On Saturday, Sunday or holiday if the injury took place during the first four (4) hours of work, four (4) hours at the applicable premium rate of pay; or, if the injury took place after four (4) hours of work, the number of hours for which they were scheduled (not in excess of eight) at the applicable premium rate of pay.

Nothing herein is intended to prevent employees from seeing a doctor of their own choice, but if they do so on the day of the injury payment under this clause shall require the concurrence of the Company.

134. A Safety Committee consisting of three employees designated by the Union and at least two management members designated by the Company shall be established to cover the plant. The Safety Committee shall hold monthly meetings at times determined by the Committee. The Committee may engage in periodic safety tours of the items agendaed as part of its regular safety meetings. Time spent in committee meetings and official committee plant tours shall be considered hours worked to be compensated by the Company. The function of the Safety Committee shall be to advise the plant management concerning safety and health and to discuss

legitimate safety and health matters but not to handle grievances. In the discharge of its function, the Safety Committee shall: consider existing practices and rules relating to safety and health, formulate suggested changes in existing practices and rules, recommend adoption of new practices and rules, review proposed safety and health programs developed by management and review accident severity and frequency statistics. All accidents involving fatalities or serious disabling injuries, or such other serious situations as merit investigation, such as fires, explosions, or like catastrophes shall be agendaed to the Safety Committee for consideration. Upon request, the Union Safety Committee will be given access on a confidential basis to reports or studies that directly relate to safety hazards, health or dangerous conditions that exist in the plant (e.g., air sampling and noise monitoring). A Union Safety Committee Member upon notice to the Management Safety Council shall be given affordable time to present issues pertaining to safety, at the Management Safety Council meeting.

135. The Union Chairperson or a designee shall be notified immediately when a serious accident has occurred. By the tenth of each month the Company will provide the Union a list of all employees who were sent from work to the physician for treatment during the prior month for work related (or claimed work related) injuries claimed at work during that month.

136. The Union Chairperson or a designee will be afforded time off from their job as may be required to visit departments at all reasonable times for the purpose of transacting the legitimate business of the Committee, after notice to the supervisor of the department to be visited and the permission (which shall not be withheld) from their own supervisor. The Company will pay up to four (4) hours/week toward the time spent in such activity.

137. New rules and regulations applicable to safety and health will be posed and discussed with the Safety Committee with the objective of increasing employee cooperation.

138. Recommendations of the Safety Committee shall be submitted to the appropriate Manager for their consideration and for such action that they may consider consistent with the Company’s responsibility to provide for the safety and health of its employees during the hours of their employment and the mutual objective set forth in Par. 130.

139. Grievances involving safety matters shall first be raised orally between the grieving employee and their supervisor as provided in the grievance procedure. If the grievance is not satisfactorily resolved, the employee may immediately (within two (2) working days) file in writing in the second step under such procedure.

ARTICLE XIV

Insurance and Pensions

140. The insurance program is outlined in the Insurance Agreement shall remain in effect for the life of this Agreement. Benefits payable under the Hospital and Surgical provisions (Daily Room and Board, In-Hospital Medical Care, Diagnostic X-ray and Laboratory Examinations, and the Surgical Schedule) outlined in the Insurance Agreement will not duplicate any benefits payable under any other employer group insurance or prepayment plan.

141. Any benefits payable under said provisions will be coordinated so that the total Benefits Payable under all such group plans will not exceed 100% of the charges for such services.

142. The term “employer group or prepayment plan” is defined as any group plan for which

any employer makes contributions or for which any employer provides a means of collecting contributions required by employees (including payroll deduction).

143. The Pension Agreement, separately executed, shall remain in effect for the term of this Agreement.

ARTICLE XV

Severance Allowance

144. When in the sole judgment of the Company it decides to permanently discontinue the operation of a plant or a substantial section of a plant and finds it necessary to terminate the employment of employees as a result thereof, any employee whose employment is terminated either directly or indirectly as a result thereof and who is not entitled or indirectly as a result thereof and who is not entitled to other employment with the Company under the provisions of Article VI of this Agreement or Par. 146 below will be entitled to a severance allowance in accordance with and subject to the provisions of this Article.

145. Eligibility. To be eligible for a severance allowance an employee must have accumulated one or more years of seniority at the time of termination, as computed in accordance with Article VI of this Agreement.

146. As an exception to Par. 145 above, however, any employee otherwise eligible for a severance allowance who is offered a job within the bargaining unit under the provisions of Article VI of this Agreement will not be entitled to severance allowances whether they accept or reject the job offer. If such a transfer results directly in the permanent termination of some other employee, that employee will then be eligible for a severance allowance, subject to all of the other provisions of this Article.

147. In lieu of severance allowance, the Company may offer an eligible employee a job outside the bargaining unit. The employee will have the option of either accepting the job offered or receiving severance allowance.

148. Scale of Allowance – An eligible employee will receive a severance allowance based on his seniority at the time of termination as follows:

Seniority as of Date of Termination		Weeks of Severance Allowance

1 year but less than 2 years		2 weeks
2 years but less than 5 years		4 weeks

5 years but less than 10 years		6 weeks
10 years but less than 20 years		8 weeks
20 years or more		12 weeks

149. Calculation of Allowance – A week of severance allowance will be calculated in accordance with the provisions for calculating a week of paid vacation as set forth in Article V of

the Agreement.

150. Payment of Severance Allowance – Payment of any severance allowance for which an employee may be eligible will be made in a lump sum at the time of termination.

151. Notwithstanding any other provisions of this Article, any employee who is eligible for a severance allowance under the provisions of this Article, may, at the time of termination, elect to be placed on layoff status for a period of one (1) year, rather than to be terminated and receive severance allowance. At the end of such period, such an employee may elect to remain on layoff status or to be terminated and receive the severance allowance to which they are entitled. If such an employee elects to remain on layoff at the expiration of such period, they will forfeit their right to the severance allowance to which they would otherwise be eligible.

152. An employee who voluntarily terminated their employment with the Company before they are terminated by the Company will not be entitled to a severance allowance.

153. Nonduplication of Allowance. Severance allowance shall not be duplicated for the same severance, whether the other obligation arises by reason of contract, law, or otherwise. If an individual is or shall become entitled to any discharge, liquidation, severance or dismissal allowance or payment of similar kind by reason of any law of the United States of America or any of the states, districts, or territories thereof subject to its jurisdiction, the total amount of such payments shall be deducted from the severance allowance to which the individual may be entitled under this Article, or any payment made by the Company under this Article may be offset against such payments. Statutory unemployment compensation payments shall be excluded from the nonduplication provisions of this Section, except that the severance allowance will be allocated by the Company to the equivalent number of weeks immediately following termination.

ARTICLE XVI

Termination, Expiration and Scope

154. The terms and conditions of the Agreement shall continue in full force and effect until 12:01 a.m. February 3, 2008, and shall continue in full force and effect indefinitely thereafter, provided, however, that either party may terminate this Agreement at any time on or after February 3, 2008 by giving to the other party at least sixty days prior written notice by certified mail of its election to terminate. In the event the Company shall desire such termination of the Agreement, such notice shall be sent by certified mail to the District Office of the United Steelworkers of America, 1126 South 70^th Street, Suite S106A, West Allis, WI 53214 and a copy shall be sent to the offices of Local Union 3245 at 1620 Shore Drive, Beloit, Wisconsin, 53511. In the event the Union shall desire such termination of the Agreement, notice of such desire shall be sent by the Union by certified mail to the offices of the Company, 449 Gardner Street, South Beloit, IL 61080. Either party may by written notice change the address to which certified mail notice to it shall be given.

ARTICLE XVII

Compliance with Law

155. It is understood and agreed that if any of the terms and provisions of this Agreement are, or become in violation of any State or Federal laws, they are null and void so long as they may be in violation, and it is further agreed that the parties hereto shall immediately meet for the purpose of resolving any term or provisions so indicated.

UNITED STEELWORKERS OF AMERICA

Leo W. Gerard

President

United Steelworkers of America

James D. English

Secretary-Treasurer

Thomas Conway

Vice President

(Administration)

Leon Lynch

Vice President

(Human Affairs)

Harry E. Lester

Director District 2

Doug Drake

Sub Director District 2

Bill Breihan

Staff Representative

Steve Reynolds

President, Local 3245

Robert Caples

Committeeperson

Gary Gillett

Committeeperson

James Elliott

Committeeperson

Gary Huffman

Committeeperson

WARNER ELECTRIC, LLC.

Stan Owens

Operation’s Manager

Charles Evans

Human Resource Manager

Gary Simpler

Legal Counsel

Tim McGowan

Vice President

Human Resources

Judy Crandall

Human Resources Rep

September 19, 1986

Mr. Lawrence Duncan

Staff Representative

United Steelworkers of America

Beloit, Wisconsin 53511

Dear Mr. Duncan:

Our policy is to utilize our own employees to the maximum practical extent in production and maintenance work. At the same time, it is recognized that problems of skill, equipment, time, economy, and know-how may render it necessary or expedient to subcontract. Whenever the Union feels that subcontracting involves work which could be done economically and within the prescribed time limits by bargaining unit employees, the Company will discuss and explain the matter upon request to the Union. It is further agreed that the Company will notify the Union in writing prior to subcontractors coming into the plant to perform such work or such work being sent out, or contracts to perform such work being signed by management. This letter is not merely meant to constitute a notification procedure but it is intended to, where possible, provide sufficient advance notice so as to allow the Union to, upon request, discuss the decision.

Sincerely,

Donald F. Sorensen

Manager - Employee Relations

Warner Electric Brake & Clutch Company

Pension

For employees who retire or otherwise become eligible on or after January 30, 2005 the following formulas apply:

Formula to be used for benefits received effective January 30, 2005:

$31.00 multiplied by years of continuous service.

APPENDIX “A”

Direct Labor 2005-2007

		2005 1% Lump		01/29/06 2006 2%		01/28/07 2007 2%
	2004	2005	2005	2006	2006	2007	2007
JOB CLASSIFICATIONS	Base	INCREASE		INCREASE		INCREASE
Assembler	15.96	0	15.96	0.32	16.28	0.33	16.61
Machinist	17.38	0	17.38	0.35	17.73	0.35	18.08
Shop Coordinator	17.85	0	17.85	0.36	18.21	0.36	18.57

Indirect Labor 2005-2007
Material Handler	15.12	0	15.12	0.30	15.42	0.31	15.73
Truck Driver	14.89	0	14.89	0.30	15.19	0.30	15.49
Truck Driver Diesel	15.41	0	15.41	0.31	15.72	0.31	16.03
Senior Return Material Specialist	16.88	0	16.88	0.34	17.22	0.34	17.56
Inspector	17.07	0	17.07	0.34	17.41	0.35	17.76

Skilled Labor 2005-2007
Tool & Die A	18.32	0	18.32	0.37	18.69	0.37	19.06
Senior Tool & Die	18.70	0	18.70	0.37	19.07	0.38	19.45
Master Mechanic A	18.09	0	18.09	0.36	18.45	0.37	18.82
Senior Master Mechanic	18.52	0	18.52	0.37	18.89	0.38	19.27
Electrician A	19.10	0	19.10	0.38	19.48	0.39	19.87
Senior Electrician	19.49	0	19.49	0.39	19.88	0.40	20.28

New Hires on or after January 30, 2005

				2006 2%		2007 2%
	2005	2005	2005	2006	2006	2007	2007
JOB CLASSIFICATIONS	Base	INCREASE		INCREASE		INCREASE
Material Handler	10.00	N/A	10.00	0.20	10.20	0.20	10.40
Assembler	10.50	N/A	10.50	0.21	10.71	0.21	10.92

APPENDIX “B”

(Rate Retention Groups)

1. Material Handler

2. Assembler

3. Machinist

4. Shop Coordinator

5. Inspector

6. Senior Return Material Specialist

7. Truck Driver

8. Truck Driver Diesel

9. Senior Tool & Die, Tool & Die A

10. Senior Master Mechanic, Master Mechanic A

11. Senior Electrician, Electrician A

APPENDIX “C”

Overtime Distribution Agreement

1. Supervisors shall be responsible for the equilization of overtime and for maintaining and

the daily posting of overtime distribution records; each group showing the names of the employees in the group and the overtime hours worked and/or declined by each employee, total overtime hours charged, and the employee’s shift and overtime group to which assigned. Overtime hours charged but not worked will be identified with a circle around the hours charged.

2. Overtime within each overtime group shall be maintained within the thirty straight time

hour spread, regardless of shift.

3. Only overtime that is offered to an employee on or before his shift prior to the shift on which the overtime is to be worked will be charged to an employee who declines the offered overtime. It is agreed that in the event an employee is scheduled to work overtime for any of the reasons spelled out below, they shall be charged. There is no intent to allow anyone to arbitrarily schedule an employee to work overtime just for the sake of charging them to bring their overtime in line without working anyone. It is understood that the twenty-four (24) hour period begins at the time the first employee will begin their overtime.

4. No employee shall be discriminated against or disciplined for their inability to work overtime, except that an employee shall be required to work overtime if they have agreed to do so, or if they have been notified to work overtime at least forty (40) hours ahead of time and have not been excused.

5. Overtime hours worked or declined by the employee shall be charged on the basis of straight time for each hour.

6. When an employee new to the Company has passed sixty days of their probationary period, they shall be charged with the average overtime hours in the overtime group to which they are assigned. The new employee will not work overtime hours prior to their 60th day unless all

employees in their overtime group are assigned to work overtime, or unless all other available employees in their overtime group have been asked to work.

7. When an employee is transferred (other than temporary transfers) they shall be charged with the average of the overtime group to which they are assigned on the first day of their transfer.

8. When an employee in an overtime group is absent for any reason, they shall be charged for the overtime hours that they could have worked had they been available.

9. When the Company attempts, but is unable to contact any employee not on Company premises, the employee shall not be charged with the overtime hours which the Company was attempting to offer them.

10. The Company may schedule employees to continue work during overtime hours which they were performing during straight-time hours even though this may create a temporary imbalance of overtime opportunities within the limitations specified in Paragraph 2 above.

11. When an overtime group is exhausted the Company will use an employee from that same occupational group provided there is not an experienced employee currently in the area.

12. If an overtime group is not exhausted, and an employee from another overtime group performs overtime work in that overtime group (except as is provided in Paragraph 34, Article IV) the Company shall reimburse the low employee in the overtime group for the actual overtime hours they would otherwise have worked, at the appropriate overtime premium rate. It is recognized that time to time an employee scheduled for overtime may fail to report as scheduled, and the Company may assign an employee from another overtime group if necessary, or an employee from the proper overtime group, whichever is practicable, without incurring any violation of these overtime distribution provisions, until such time as with reasonable diligence a proper employee from the proper overtime group can be assigned. For purposes of this Appendix, the availability of an employee in an overtime group shall be considered exhausted if all hours of overtime opportunity are offered to the employees within the overtime group in a twenty-four (24) hour period in accordance with the provisions of Article III and Article IV of this Agreement.

13. If the Company bypasses the lowest available employee in the overtime group (and the overtime hours of such employee are lower than the permissible spread at the time the overtime begins), the Company shall be liable to reimburse such employee at the appropriate overtime premium rate for the actual overtime hours they otherwise would have worked. Employees who receive reimbursement without working shall be charged with the appropriate number of hours on the overtime list.

14. The overtime distribution total shall continue from year to year without a cutoff date being applicable. In other words, if an employee is behind on their overtime opportunities for the previous contract year, they shall have first opportunity for overtime hours in the succeeding year. The overtime totals shall be carried over at the end of each contract year in the same manner as they are carried over from month to month during the contract year.

15. For purposes of overtime distribution only, a vacation taken in weekly increments will be considered to start on Friday after the completion of the employee’s shift and finishing at the start of the employee’s shift on Monday following the week or the multiple of weeks vacation. In the

case of a day or day’s vacation immediately before a weekend, the weekend shall be considered as part of the employee’s vacation with work commencing on their regular shift on Monday. If the employee elects to take a day or day’s vacation starting Monday, the vacation will be considered as having started on the previous Friday at the end of the employee’s shift. In the case of single day’s vacation taken on Friday or Monday, an employee may at their option, if asked, work weekend overtime.

16. In scheduling weekend overtime the following procedure shall apply:

(A) The supervisor involved will, in accordance with normal practice, determine how many, and which employees are required for Friday, Saturday, and Sunday overtime.

Should the supervisor determine to ask an employee who would be “on vacation” (which, in accordance with this paragraph 15 of the Overtime Distribution Agreement, begins at the end of their shift on Friday) the employee will be charged for overtime if asked. If the employee’s entire overtime group has been scheduled, the employee will be considered “asked.”

(B) The Company may, either by asking the employee as an individual or by scheduling their entire overtime group, offer an employee overtime work on the Friday or Saturday or Sunday which begins their vacation. No disciplinary action will be taken if the employee refuses this overtime unless they have accepted the overtime assignment and fail to report.

When the Company schedules or asks an entire overtime group for a week or more at a time all employees in that overtime group will be charged for all hours scheduled or asked unless the employees overtime is cancelled by a supervisor.

When an employee is on leave of absence or vacation they will be charged for overtime hours worked if one employee above the employee on leave of absence or vacation and all the employees below are asked to work.

(C) With the exception of the Friday or Saturday or Sunday which begins as employee’s vacation, an employee on vacation will not be eligible for overtime assignments during their vacation, but will however be charged for overtime in accordance with Paragraph 8 of the Overtime Distribution Agreement.

17. If an employee has a physical limitation, known to the supervisor, due to a dermatitis condition, back or weight limitation, or legal restriction, etc., so that they are precluded from these tasks during straight time hours, they will not be permitted to work at these tasks on overtime hours. However, they shall be charged for all overtime hours that would have been available to them, provided that another employee actually performs the work. Such limitation shall be noted on the overtime record.

18. The Company shall make every attempt to notify employees of overtime as soon as possible.

APPENDIX “D”

OVERTIME GROUPS

Group #1 – Material Handler

Group #2 – Assembler

Group #3 – Machinist

Group #4 – Shop Coordinator

Group #5 – Inspector

Group #6 – Senior Return Material Specialist

Group #7 – Truck Driver

Group #8 – Truck Driver Diesel

Group #9 – Senior Tool & Die, Tool & Die A

Group #10 – Senior Master Mechanic, Master Mechanic A

Group #11 – Senior Electrician, Electrician A

LETTER OF UNDERSTANDING

Any overtime groups agreed to, are subject to change as new cells are developed.

ENROLLMENT DATES

Group Health Insurance

The participant can re-enroll on January 1st of each year. The participants cannot make a change in plan coverage unless there is a qualifying event such as marriage, birth, etc. Changes such as adding a dependent, dropping a dependent may be made at any time during the year.

Option Life

Participants may enroll or increase their coverage once a year during the first two calendar weeks of December. They may stop at any time with 30 days advanced notice.

401(k)

Initial enrollments, changes in the amount of contribution, investment elections, and investment transfers can be done at any time. Contributions may be stopped at any time. Participants may reenroll the first day of the following month after they stop deductions.

APPENDIX “E” INSURANCE

SCHEDULE OF BENEFITS

For You		For Your Dependents
Life insurance: $35,000 effective 1/30/05		Life insurance: Spouse $4,000 Each dependent child $2,000

Additional life and AD&D: In $1,000 increments combined maximum coverage $55,000 through payroll deduction.		Additional spouse and dependent life insurance: Spouse $10,000/dependent $4,000 available through payroll deduction.

Sickness & Accident: 1/30/05 - $360/26 weeks 1/29/06 - $370/26 weeks 1/28/07 - $380/26 weeks		Not applicable.

Life insurance and accidental death and dismemberment insurance benefits are both occupational and non-occupational. All other benefits are non-occupational.

No benefits for A.D. & D. shall be payable for any loss resulting from taking poison, asphyxiation, or inhalation of gas, self-destruction, acts attributable to war and other causes specified in the policy; or, when the date of accidental bodily injury is more than one hundred twenty days from the date the loss is sustained.

Accident and sickness benefits begin on the first day of accident, first day of hospitalization or outpatient surgery, and eighth day of sickness, and continue for a maximum of twenty-six weeks during any one period of disability. Worker’s Compensation to be supplemented by Accident and Sickness Benefit including a payment at the per diem Sickness and Accident level (1/5^th of the Sickness and Accident Weekly Benefit Amount) for the Worker’s compensation waiting period (not including the day of the accident which is covered by Paragraph 133 of the Collective Bargaining Agreement). Such supplement for the waiting period may be by direct payment or

insured with the Sickness and Accident carrier and if the waiting period is subsequently paid by any other insurance, by any governmental agency or from any other source, the Company shall be entitled to reimbursement from the employee by payroll deduction, set off from future Worker’s compensation payments from the Worker’s Compensation insurance carrier or any other reasonable method of recoupment, other than recoup from a private policy carried by the individual employee where he or she is paying the full premium.

The individual certificate will define a continuous disability or confinement.

“Dependents” include only, your spouse and unmarried children from the date of live birth until nineteen years, stepchildren and legally adopted children are eligible dependents; but parents or other relatives are not eligible for dependent coverage even though supported by you. Children after attainment of age nineteen while incapable of self support because of a disabling sickness or injury that commenced prior to age nineteen are covered provided such child was eligible for coverage as a dependent prior to age nineteen. Such children must otherwise meet the definition of dependent children, must legally reside with you, and must be principally supported by you. Children until age twenty seven are eligible dependents if they are full-time students at an accredited school provided they are unmarried and otherwise a dependent.

Eligibility – A regular employee actively at work will be eligible immediately. Future new regular employees will become eligible on the first day of the month after hire.

Employees and dependents who retire between the ages of 57 and 65 shall have their coverage continued (except for regular life insurance, A.D. & D., and weekly sickness and accident benefits) until such time as they are qualified for Medicare or Medicaid or in the case of children until they no longer qualify because of age, disability, marriage, etc.

Diagnostic X-ray and Laboratory Services – in or out of hospital when required in the diagnosis of any condition or disease or injury on a usual and customary basis. Such charges to include pap smear, urinalysis and blood tests.

Examination – Electrocardiogram, Electroencephalograms, Basal Metabolism tests, and radioactive isotope studies on a usual and customary basis.

Radiation Therapy – in or out of hospital.

Anesthesia – Professional administration in connection with surgical or obstetrical cases.

INSURANCE AGREEMENT

THIS AGREEMENT is made and entered into this 30^th day of January 2005 by and between WARNER ELECTRIC, LLC or its successors or assigns (hereinafter referred to as the “Company”) and the UNITED STEELWORKERS OF AMERICA (hereinafter referred to as the “Union”) on behalf of itself and LOCAL UNION NO. 3245.

Definitions

1. Wherever used herein:

(a) “Employee” means an individual in the bargaining unit who has completed their

first 60 days (except for health care);

(b) “Program” means the program of insurance benefits established by this Agreement;

Program of Insurance Benefits

2. The Program shall be applicable to Employees while this Agreement is in effect in accordance with the provisions of this Agreement, subject to the following provisions:

(a) Employees not actively at work on January 30, 2005 shall not be eligible to participate under the Program until they return to active work on or January 30, 2005 provided, however, that any Employee who shall return to work and who shall subsequently become eligible for benefits due to a recurrence of a disability or claim which commenced prior to January 30, 2005, will be eligible for benefits at the applicable rates of benefits provided for under the Program, but only for the balance of the period for which he would have been entitled to benefits under the Prior Program.

(b) Benefits provisions of the Program not contained in the Prior Program shall not be applicable to any period prior to March 1, 1990.

(c) The amounts of life insurance after retirement provided for under the Program shall be applicable to retirements on or after January 30, 2005.

Anthem Blue Cross Blue Shield

3. (a) Effective March 1, 2002, a new comprehensive major medical, hospital, surgical and medical program and a modified drug plan will become effective for all employees per negotiated specifications set forth more completely in the Insurance Booklet. Basic features of the plan are as follows:

ANTHEM SCHEDULE OF BENEFITS

Benefit	In-Network	Out-of-Network
Annual Deductible	None	$200/400
Coinsurance	100%	80%/20%
Out-of-Pocket Maximum	$1,000/$2,000	$2,500/$5,000
Lifetime Maximum	Unlimited	Unlimited
Eligibility Period	1^st Day of the Month After Hire	1^st Day of the Month After Hire
Inpatient Hospital Services
Inpatient Care	$200 Copay then 100%	80%/20%
Surgery & Anesthesia	100%	80%/20%
Physicians Services	100%	80%/20%
*Supplies & Services	100%	80%/20%

Rehabilitative Services	100%	80%/20%
X-ray & Lab Services	100%	80%/20%
Outpatient Services
Urgent Care	$15 Copay/$30 Specialist Copay	80%/20%
Outpatient Surgery	$100 Copay then 100%	80%/20%
Maternity Services
Office Visits	100% After Initial $15 Copay	80%/20%
Hospital Services	100%	80%/20%
Prenatal-Postpartum	100%	80%/20%
Mental Health
Inpatient	$200 Copay then 100% No Specific Limit ***	80%/20%***
Outpatient	$30 Copay – No Specific Limit***	80%/20%***
Substance Abuse
Inpatient	$200 then 100% No Specific Limit***	80%/20%***
Outpatient	$30 Copay – No Specific Limit***	80%/20%***
Hospital Emergency Room – Emergency	$50 Copay**	80%/20%
Medical Services
Office Visits	$15 Copay	80%/20%
Gynecological Visits	$15 Copay	80%/20%
Specialist Visit	$30 No Referral	80%/20%
Well Child (Immunizations)	$15 Copay	80%/20%
Annual Physical	$15 Copay Plus Plan Pays $150 for Additional Preventative Svcs	80%/20%
X-ray & Lab	100%	80%/20%
Infertility Diagnosis (Diagnosis Only)	$30 Copay	80%/20%
Allergy Tests & Treatment	$15 Copay PCP or $30 Copay Specialist	80%/20%
Prescription Drug
Generic	$10 Copay	$10 Copay
Brand	$15 Copay	$15 Copay
Non-Formulary	$40 Copay	$40 Copay
Mail Order	90-day supply, $10, $15, $40	90-day supply, $10, $15, $40
Retail	90-day supply, $23, $33, $83	90-day supply, $23, $33, $83
Oral Contraceptives	Covered	Covered
Vision Care
Eye Exam	$60 – 12 months no network	$60 – 12 months no network
Frames	$50 – 24 months no network	$50 – 24 months no network
Lenses	$36 to $70 – 12 months – no network	$36 to $70 – 12 months – no network
Contacts	$100 – 24 months – no network	$100 – 24 months – no network
Other Services
Skilled Nursing Facility	100% (100 days/episode)	80%/20%
Home Health Care	100% (90 Days Maximum)	80%/20%

Ambulance Services	100%	80%/20%
Hospice Services	100% (6 Months Maximum)	80%/20% (6 Months Maximum)
Durable Medical Equipment	80%/20% to $5,000	80%/20%
Chiropractic Services	$20 Copay ($500 Maximum)	80%/20% ($500 Maximum)

*Medically necessary

**Waived if admitted

***Precertified by Anthem Behavioral Health

Weekly Premiums –	Year 1
		Single	$	12.70
		Couple	$	25.41
		Family	$	36.84
	Year 2
		Single	$	19.48
		Couple	$	38.96
		Family	$	56.49
	Year 3
		Single	$	24.63
		Couple	$	49.28
		Family	$	71.45

All employees hired on or after January 30, 2005:

Weekly Premiums –	Year 1
		Single	$	21.17
		Couple	$	42.35
		Family	$	61.41

	Year 2
		Single	$	24.35
		Couple	$	48.70
		Family	$	70.62

	Year 3
		Single	$	28.00
		Couple	$	56.01
		Family	$	81.21

Dental (Delta Dental of VA)

Deductible		$25/$75
Benefit Type:
Preventive ($0 Ded.)		100%*
Basic		80%*
Major		50%*
Orthodontic Benefit ($0 Ded.)		50%*
Maximum Benefit per Year		$1,000 per person
Orthodontic Lifetime Maximum		$1,500 per person

*DeltaPreferred and DeltaPremier dentists will accept Delta Dental’s payment, plus any required employee coinsurance and any applicable deductible as payment in full. These dentists will file your claims for you. If you go to a non-network dentist, payment will be made directly to you unless you assign benefits to the dentist. Delta Dental will pay the lower of usual, reasonable, and customary as determined by the Plan of the state in which services are rendered or the fee the dentist bills for covered services. You will be responsible for paying the difference between the non-participating dentist’s charge and Delta Dental’s payment.

Weekly Premiums	Single	$	1.76
	Couple	$	3.01
	Family	$	5.15

Hearing aids and the associated examination will be self-funded at 50/50 to a maximum Company payment of $2,500 every three (3) years. Eligible dependents are covered.

(b) Future pre-65 retirees employed prior to January 30, 2005 will also have Anthem Blue Cross Blue Shield. Premiums will be the same as for active employees.

(c) Employees with life insurance and AD & D coverage shall have the right, at their option, to increase both coverages equally through payroll deduction, at their own expense, in $1,000 increments, at $.44/month per $1000, up to a maximum of $55,000 life insurance coverage and $55,000 AD & D coverage. Coverage shall be on a monthly basis. Employees may initiate, increase, or decrease such additional coverages during the first two (2) weeks of December and may terminate at any time upon thirty (30) days written notice.

(d) The dental program shall not be subject to the insurance continuation provisions of Section 11 of this Agreement, nor shall this program be provided for future retirees.

(e) Employees with dependent life insurance coverage shall have the right, at their option, to increase the coverage through payroll deduction, at their own expense at the rates listed below. The additional $10,000 spouse/$4,000 dependent insurance coverage shall be paid on a monthly basis through payroll deduction. Employees may initiate, increase, or decrease such additional coverages during the first two (2) weeks of December and may terminate at any time upon thirty (30) days written notice.

Age of Employee	Cost Per Family Per Month

Less than 30	$	1.50
Age 30-34	$	1.60
Age 35-39	$	1.90
Age 40-44	$	2.60
Age 45-49	$	3.80
Age 50-54	$	5.60
Age 55-59	$	8.40
Age 60-64	$	12.20
Age 65-69	$	18.70

Cost of Benefits

4. The cost of the benefits under the Program shall be paid by the Company, except as provided below in this Paragraph 4 and 7 hereof:

(a) Any employee on layoff who elects to continue basic life insurance after the last month of layoff for which such life insurance is continued without contribution by him will be required to pay $.44 per month (or the applicable group premium rate at the time of the layoff) per $1,000 of basic life insurance for each month as to which he is eligible in order to continue such insurance.

(b) The amounts required to be paid for benefits provided under law in excess of basic Program benefits shall be paid entirely by the Employees.

Participation by Employees

5. Each employee shall be a participant in the Program and the amount, if any, which he shall be required to contribute to the cost thereof shall be deducted by the Company from his pay. Each Employee shall furnish to the Company any such written authorization or assignment (in a form agreed to by the Company and the Union) as shall be necessary to authorize the deduction from his pay of the amount of any contributions.

Changing selection during plan year is possible only if you have a change in your family situation. This would include:

• The birth or adoption of a child.

• Marriage or divorce.

• Death of your spouse or other dependent.

• Significant change in employee or spousal health coverage attributable to the spouse’s employment.

• Employee or spousal employment status change.

Other major changes may be considered, depending on the circumstances.

Requirements of Law

6. It is intended that the provisions for the insurance benefits which shall be included in the Program shall comply with and be in substitution for the provisions for similar benefits which are or shall be made by any applicable law or laws. Where, by agreement, certain basic benefits under the Program are provided under law rather than under the Program, the Company will pay the amount required to be paid therefor, including any employee contribution required by law on account of such benefits. The Company shall, after consultation with the Union, reduce the benefits of the Program to the extent that benefits provided under any law would otherwise duplicate any of the Program benefits.

Effective January 30, 2005, active and retired employees and their dependents, who are 65 years or older and who are entitled to Medicare, will not be reimbursed for the Part B monthly premium, if they are paying such premium under the Medicare Program. In addition, the Company will not reimburse the monthly Part B premium for disability retirees retiring on or after January 30, 2005 if they are paying such premium under the Medicare program.

Additional and Alternate Benefits

7. The Program shall be in substitution for any and all insurance benefits or payments to or on behalf of Employees for death, sickness or accident, hospitalization, medical or surgical service provided by the Company in whole or in part, except as the Company and the Union have agreed or may agree in writing.

Administration of the Program

8. The Program shall be administered by the Company or through arrangements provided by it. Except as may otherwise be provided in this Agreement, the Company will arrange to have the hospitalization and physicians’ services benefits under the Program provided through contracts with carriers selected by the Company, which contracts, respectively, shall be consistent with this Agreement and shall provide benefits in the amounts listed in Appendix E. Sickness and accident benefits and life insurance shall be provided by such method and through such carriers, if any, as the Company in its sole discretion shall determine.

All benefits except life insurance, accidental death and dismemberment and weekly income benefits shall be paid directly to the provider of the service for which benefits are payable.

Administration of Sickness and Accident Benefits

9. The payment of sickness and accident benefits is an obligation of the Company, but the Agreement with the Union permits the Company to provide the payment through a policy with an insurance company. The Company performs important administrative functions in connection with the handling of claims, including the issuance of benefit checks. In the typical case, such handling is routine and a claim is paid within two weeks after it is received by the Company. The Company is authorized to make benefit payments on claims without prior approval of the insurance company when Company personnel engaged in claims work determine the claim meets the standards established by the insurance company for Company approval. If you have a claim which does not meet these standards it is referred to the insurance company for decision and you are notified of such action within two weeks after the claim is received by the Company. In reaching its decision, the insurance company may take reasonable steps to investigate the medical

and other factual aspects of the claim.

Life Insurance for Retirees and Employees Age 65

10. An employee who shall retire on or after January 30, 2005 under the Company Pension Plan at or after age 62, or who accepts early retirement between the ages of 57 and 62 with either a reduced pension immediately or a deferred pension at age 62 under the Company Pension Plan, will at that time be eligible for continuation of his life insurance in the amount of $5,000.00.

An employee who shall retire on or after January 30, 2005 under the disability provisions of the Company Pension Plan at or after age 57 and prior to age 62 will have his life insurance (in the full amount set forth in Appendix E) continued until age 62 at which time it will be reduced to $5,000.00

An employee who shall retire under the disability provisions of the Company Pension Plan prior to age 57 will receive in equal monthly installments over a five year period the full face value of his life insurance benefit then in effect. If death occurs before the full face value has been paid, his beneficiary will be paid the difference between said full face value and the amount already paid.

An employee who shall leave the Company when eligible for a deferred vested retirement benefit under the Company Pension Plan is not eligible to have his life insurance continued either before or after age 65.

An employee with Seniority as of November 1, 1969 and who retired at or after age 62 without having achieved eligibility for pension benefits under the Company Pension Plan, shall receive life insurance in the amount of $2,500.00. Such employees hired after November 1, 1969 who retire without having achieved pension eligibility will not receive any life insurance at the time of their retirement or termination.

At the time an employee in any of the above categories leaves the employment of the Company, Accidental Death & Dismemberment coverage will cease.

Mail order drug service will be provided to all future retirees with a $10.00 co-pay.

Extension of Benefits

11. If an employee shall be absent from the service of the Company for a period not to exceed thirty (30) months, due to non-occupational disability (validated by doctor’s certificate) the insurance program shall be kept in effect for such employees during such thirty (30) month’s period only. In cases of absence due to occupational disability, the insurance program shall be kept in effect for up to five (5) years.

In cases of layoff of employees with less than two (2) years of seniority, the group insurance program shall cease on the last day worked except that such employee shall have the conversion privileges provided for in the master insurance policy. In cases of layoff of employees with two (2) or more years of seniority, sickness and accident benefit coverage will cease on the last day worked; life insurance, hospitalization benefits, and surgical benefits shall be kept in effect for two (2) months after the end of the month in which the employee last worked; life insurance may be continued thereafter for a period of an additional twelve (12) months by paying

the required premiums in advance to the Company in the amount specified in Paragraph 4 (a) above.

In cases where an active employee dies with five (5) but less than ten (10) years of seniority with dependent coverage in effect at the time of death, the dependent coverage (hospital, surgical, medical, dental and drug only) will be continued for the dependents during the month of death and the following six months assuming continued payment of the monthly premium contribution provided for in the group insurance program. This extension shall be the month of death and the twelve following months in the case of an active employee who dies with ten (10) or more years of seniority and with dependent coverage in effect at the time of death.

Extent of Company Obligation

12. The failure of any carrier to provide for benefits under the Program shall not result in any liability to the Company, nor shall such failure be considered a breach by the Company of any of the obligations which it has undertaken by this or any other agreement with the Union. In the event of any such failure, the Company and the Union shall immediately take action to provide substitute coverage in accordance with the provisions of this Agreement. Differences between claimants and the insurance carrier or their agents shall not be subject to the grievance procedure provided in the Basic Agreement. In the event of a disputed claim the Company will assist in communicating with the insurance carrier to assure compliance with the Master Insurance Contract.

Insurance Reports

13. The Union shall be furnished, upon request, an annual report regarding the Program. From time to time during the term of this Agreement, the Union shall be furnished such additional information as shall be reasonably required for the purpose of enabling it to be properly informed concerning the operation of the Program. Any accounting under the Program shall make no distinction between the experience with respect to Employees and other employees who may be covered, except that experience of employees who participate in the Program on a different basis or are entitled to different benefits from those provided for employees represented by the Union shall be included in such accounting only to the extent that the Company and the Union agree to such inclusion. The Company will continue the present arrangements under which it undertakes the keeping of insurance records of individual employees, the completion of individual employees’ certificates, the recording of changes in insurance classifications and a major portion of the investigation and payment of claim. The cost to the Company of performing such work will not, for any accounting under the Program, be deemed to be a cost of the Program.

Term of Agreement

The Insurance Agreement dated January 30, 2005 shall remain in effect through February 3, 2008. This Agreement shall become effective as of January 30, 2005 and shall remain in effect until February 3, 2008 in accordance with the Basic Agreement.

EX-10.4 34 a2155511zex-10_4.htm EXHIBIT 10.4

Exhibit 10.4

2004 – 2007

Agreement Between

Wichita Falls Facility

Warner Electric, LLC

International Association of Machinists & Aerospace
Workers A.F.L. – C.I.O. and Aeronautical Industrial
District Lodge 776

Local Lodge 2771

Table of Contents

1.	Article 1 – Recognition

2.	Article 5 – Hours of Work & Overtime

3.	Article 6 - Seniority

4.	Article 7 – Leave of Absence

5.	Article 8 – Grievance Procedures & Arbitration

6.	Article 9 – Vacation

7.	Article 10 – Holidays & Paid Personal Time Off

8.	Article 12 – Group Insurance

9.	Article 13 – Wages

10.	Article 16 – Safety & Health

11.	Article 27 – Term of Agreement

12.	Addendum B – Job Classifications

13.	Wage Rate Structure

14.	Addendum F – Retirement & Savings Plan

15.	Addendum G – 2^nd Shift

16.	Plant Rules & Regulations

Agreement

This agreement has been made and entered into this 9th day of August, 2004, by and between the Wichita Falls Plant, Warner Electric LLC. Wichita Falls, Texas, hereafter referred to as the “Company”, and the International Association of Machinists and Aerospace Workers, AFL-CIO, and Aeronautical Industrial District Lodge 776, Local Lodge 2771, hereafter referred to as the “Union”.

The purpose of this agreement is to set forth terms and conditions of employment, to prevent interruptions of work and interference with the efficient operations of the Company’s business, to secure fair and prompt disposition of grievances, to establish satisfactory working conditions, hours of work and wages for employees covered by the agreement, and generally to promote sound labor-management relations.

NOW THEREFORE, IT IS AGREED AS FOLLOWS

Article 1

Recognition

1.1 The Company recognizes the International Association of Machinists and Aerospace Workers, AFL-CIO, and Aeronautical Industrial District Lodge 776, Local Lodge 2771 as the sole authorized representative for the purpose of collective bargaining with respect to rates of pay, hours of employment, and other conditions of employment for all employees generally engaged in the manufacturing, maintenance, and production at the Wichita Falls Plant, located at 2800 Fisher Road, Wichita Falls, TX. 76302

This agreement does not cover supervisory forces as defined by the laws of the United States, nor does it include office clerical employees, office janitors, technical employees, drafters, drafting room employees, a Working Supervisor on the second shift and one on the third shift as defined in paragraph 1.3 of this article, and accounting employees or outside service personnel.

1.2 The term employee or employees when used in this agreement shall refer to those employees within the bargaining unit employed by Wichita Falls Plant located at 2800 Fisher Road, Wichita Falls, TX. 76302

1.3 The provisions of this agreement shall not prevent supervisors from performing work when necessary in the performance of their regular duties. However, except for the second and third shift-working supervisors, it shall be considered a violation of this agreement for any supervisor to perform work covered by the agreement, which takes more than twenty (20) percent of his/her time on any day or any one shift. Except for the second and third shift working supervisors, in no event shall the supervisors be permitted to continue for a period in excess of five (5) consecutive days, except when bargaining unit people are not available to do the work due to reasons beyond the Company’s control.

There shall be a working supervisor on the second and third shifts until there are ten (10) bargaining unit people on second shift, and five (5) bargaining unit people on third shift, at which time they will become full time supervisors and subject to the limitations above.

The second and third shift working supervisors shall be permitted to perform bargaining unit work, but not to exceed twenty (20) hours per week excluding the staging of parts and unplanned absences. Overtime work performed when all qualified employees on such shift have been offered the overtime assignment shall also be excluded from the twenty (20) hour limitation.

1.4 Non-bargaining unit employees shall have the right to set up automatic machines in the plant; and may spend a reasonable amount of time in the introduction of any new technology in the plant; and, in the case of supervisors, the time consumed in doing this shall not be considered in arriving at the twenty (20) percent.

Article 2

Management Rights

All rights of management not specifically limited by the provisions of other articles of this agreement are retained by the Company, including, but not limited to, the right to plan, direct, and control all the operations or services to be performed; to assign and transfer employees; to schedule the working hours; to hire and promote; to demote; to suspend, discipline or discharge for just cause; to relieve employees from duty because of lack of work or for other legitimate reasons; establish, revise and enforce shop rules and regulations; to introduce new job classifications, methods, materials, equipment or

facilities; to establish and revise appropriate machine speeds and feeds and other job specifications; to establish and enforce production standards; to determine the process of manufacturing and assembling; to decide and determine all matters affecting designing and engineering; to determine and control all materials, semi-manufactured and/or finished products which may be incorporated in the products manufactured; to determine the price at which the products of the Company may be sold; to determine which products to manufacture; to determine the location of the work force; and to determine any other policy or practice which is customarily or usually left to management of a Company.

The Company shall also have the right to establish, maintain, and enforce reasonable rules and regulations to maintain order and efficiency in its plants, it being understood and agreed that such rules and regulations shall not be discriminatory nor inconsistent or in conflict with the provisions of this Agreement. The Company shall furnish the Union with a written copy of all such rules and regulations and all changes therein. Except when health and safety of employees create an emergency requiring sooner effort, changes in existing rules and regulations, as well as new rules and regulations promulgated by the Company, shall not become effective until three (3) work days after copies thereof have been furnished to the Union and posted on the Company’s bulletin boards. The Company reserves the right to add, delete, or amend any rule and regulation at such time as is necessary to maintain proper Company policies and employee relations.

Article 3

No Strike – No Lockout

3.1 No Strike — The Union agrees that during the life of this Agreement there shall be no work stoppage, shutdown, or strikes of any nature. The grievance and arbitration procedure shall be the sole means of settling contract disputes between the employees and/or the Union and the Company. Provided however, that the restriction against strikes and lockout activity as set forth in this Article shall not apply to the Company or the Union if the other party refuses to abide by an arbitrator’s lawful award rendered in accordance with this Agreement. An employee who aids, assists, or participates in any interruption of production during the life of this Agreement shall be subject to immediate dismissal from the employ of the Company.

3.2 No Lockout — The Company agrees not to lockout employees during the life of this Agreement. A layoff or shutdown for business reasons (including taking inventory) shall not be construed as a lockout.

Article 4

No Discrimination

4.1 The Company and the Union recognized their respective responsibilities concerning Presidential Executive Orders and Federal and State Legislation regarding Equal Employment Opportunity requirements.

4.2 In recognition of the practical and moral values of these responsibilities, the parties hereby affirm these commitments not to discriminate because of race, color, religion, national origin, sex, handicap, age, ancestry, or having been a Vietnam Veteran.

4.3 The Company and the Union mutually agree not to discriminate against any employee because of membership or non-membership in the Union. The Company recognizes and will not interfere with the rights of the employee to become a member of the Union and will not coerce or intimidate such employees from becoming members of the Union. The Union agrees it will not solicit employees to become members of the Union on Company time, and it further agrees it will not in any way seek to coerce or intimidate employees into joining the Union at any time.

4.4 Any reference in this Agreement or other documents executed by the parties, relating to employees of either sex shall be considered as being equally applicable to employees of both sexes.

Article 5

Hours of Work & Overtime

5.1 Nothing in this Agreement is to be construed as an obligation on the part of the Company to employ any person or persons for any definite period of time. The provisions of this article shall not be construed as a guarantee of any number of hours of work per day or per week, nor as a limitation upon the Company’s right to schedule more or less hours per day or week as in it’s judgment the operations of the plant requires. Overtime shall not be paid more than once for the same hours worked and hours for which an overtime premium is paid shall not be used in computation made for the purpose of determining whether premiums are to be paid for other hours. There shall be no

pyramiding of overtime premiums.

5.2 The normal workweek shall consist of five (5) consecutive workdays, Monday through Friday. The normal workday shall consist of eight (8) consecutive hours excluding a one-half (1/2) hour unpaid lunch period.

5.3 For payroll purposes, the workweek shall be a seven (7) consecutive day period starting at 12:01 A.M. on Monday. For payroll purposes, the workday shall be the twenty-four (24) hour period beginning at 12:01 A.M. each day. All employees covered by this agreement shall be paid weekly and the Company agrees not to withhold more than one (1) week’s pay.

5.4 The Company shall have the right from time to time to adjust the normal shift starting times by department between 6:00am and 8:00am for the first shift and between 2:30pm and 4:30pm for the second shift. When all employees in a department are not affected by a change in shift hours, the Company will first solicit volunteers.

5.5 Scheduled starting and quitting times for employees accepting daily overtime assignments shall be at the discretion of the Company.

5.6 Distribution of Overtime. Both parties agree that it is fair to make every reasonable effort to divide overtime work, so far as practical within each job classification, department and shift based upon the qualifications of the employee to perform such work without displacing the employees normally performing that work during the normal work week. Saturday and Sunday will not be construed as part of the normal workweek except in the case of mandatory overtime. An employee wishing to be removed from the voluntary overtime offer list can request an Overtime Refusal Form from his Supervisor. After completing and turning said form in to his Supervisor, the employee will not be asked for overtime until such time that employee requests to be asked, in writing, to their Supervisor. As the employee’s name comes up on the overtime roster they will be charged as refused overtime.

The Company shall require each supervisor to keep a record of each employee working under his direction who is offered overtime and does not work the overtime offered. The Company shall maintain overtime records by department, classification and shift. As an individual’s name comes up on the overtime tally, he will be charged such overtime, whether or not he accepts the assignment. Employees absent from work and receiving pay from the Company will not be charged for overtime hours. Sickness, Accident and

Workers Compensation excluded. Employees can only be charged overtime hours for the number of hours offered to them. The shop committee shall at all reasonable times have access to overtime records, and will be given a copy upon request. Hires, rehires, or employees who change job classifications or shifts shall be assigned the average hours charged to the employee already in the classification, department, and shift. It is understood that beginning with the effective date of this agreement and each contract anniversary thereafter, all overtime records will be reset to zero.

Every effort will be made to make overtime assignments outside of departments to qualified employees lowest on the overtime tally, but only after department and shift requirements have been met. Overtime worked in other job classifications, departments, or shifts shall be charged to the employee on the overtime record.

5.7 It is agreed that in the event of change in the starting or ending time of a shift, the Company will notify the affected employees in such department during the preceding shift of such change. When the Company changes the scheduled report time for the beginning of a shift and the first day of the work week results in the starting time of the new week overlapping into the last day of the previous work week nothing in this article is to be construed to require the Company to pay overtime because of this overlap. Provided further however, if at the start of a new work day at 12:01 A.M. and an employee is already working, and at that time is being paid an overtime rate by reason that he had worked in excess of eight (8) hours or ten (10) hours during the work day immediately preceding, he shall continue to receive the appropriate overtime rate and not have pay reduced because of the advent of the new work day. For pay purposes a new work day will be established only after the employee leaves the premises. When a department or part of a department is scheduled to work on Saturday the employees involved will be notified, in all cases possible, before the end of the shift on Thursday. Thereafter changes necessary will be made as soon as practical. Employees will not be charged for any weekend overtime hours refused if the hours were offered after the end of their shift on Thursday. Employees may refuse daily and Saturday overtime, provided however that in the event no qualified employee(s) accepts such overtime work, qualified employees in that job classification, department, and shift affected having the least overtime charged shall work the assigned overtime. As an option, qualified employees as determined by the Company in other classifications and on the same shift may be assigned the overtime assignment. Employees may refuse overtime on Holidays and on Sunday.

Employees failing to work accepted weekend overtime hours will be subject to Plant Rule # 43.

To provide opportunity for others to work in the place of employees who may not desire to do so, an employee when contacted about working overtime shall give a “Yes” or “No”

answer within thirty (30) minutes. Employees will not be charged for any overtime hours refused if the hours were offered within the final one half hour of their shift.

5.8 Overtime Premium (1 1/2) Overtime Premiums of time and one-half (1 1/2) of the straight time hourly rate shall be paid as follows:

A. For all hours worked in excess of eight (8) hours in any one (1) workday.

B. For all hours worked in excess of forty (40) hours in anyone (1) workweek.

C. For all hours worked by an employee on Saturday in any workweek.

5.9 Double-time Premium (2) Overtime premiums of two (2) times the straight time hourly rate shall be paid as follows:

A. For all hours worked by an employee on Sunday in any workweek.

B. For all hours worked in excess of ten (10) hours in any one (1) workday.

C. For all hours worked on days defined as Holidays under this Agreement, except when such hours are part of a shift commencing on the one day and carrying over into the Holiday.

Article 6

Seniority

6.1 The term “seniority” as used in this contract is hereby defined as the length of an employee’s continuous service with the Company dating from his last date of hire. When two (2) or more employees have the same seniority date, this seniority shall be determined by a toss of a coin. The Chairman of the Grievance Committee shall be given an updated plant-wide seniority list of employees upon request at least every six months.

6.2 Probationary Period. A new employee, including an employee who is rehired after a break in continuity of service with the Company, shall be regarded as a probationary employee until he has completed two (2) months of service with the Company following the day of his last date of hire. During the probationary period an employee may be

discharged for any cause whatsoever and shall have no recourse or right to grieve against such discharge. Upon successful completion of the probationary period, the employee shall have seniority status and will be considered a seniority employee.

6.3 Loss of Seniority. The seniority status and continuous service of an employee shall be terminated for any of the following reasons:

A. Resigns, quits, or retires.

B. Discharged for just cause.

C. Absent due to layoff for a period not to exceed the length of service at the time of layoff, or two (2) years, whichever is less.

D. Fails to respond to a recall from layoff within seventy-two (72) hours (excluding Saturdays, Sundays, and Holidays) following the date of receipt of notice of recall. Notice by the Company shall be sufficient if given by certified mail, return receipt requested, and sent to the employee’s last known address. Recalled employees who intend to return to work must contact the Plant Manager / Human Resources Representative or their Designee within a three (3) day period to make his intentions known to the Company. Such employee may have five (5) additional days if he has been reemployed and the employer requires a quit notice. Evidence of the need for this five (5) day extension may be required. Such employees who fail to report by the end of the time period will be removed from the seniority roster.

E. Absence due to sickness or injury including on the job injuries as follows:

Seniority at Time of Illness or Injury		Time Limit
Less than six (6) months		Three (3) months
Six (6) months but less than one(1) year		Six (6) months
One (1) year but less than two (2) years		Twelve (12) months
Two (2) years or more		Twenty Four (24) months

F. Fails to report to work following the conclusion of an approved leave of absence or vacation.

G. Fails to report or contact the Plant Manager / Human Resources Representative or

their Designee within one (1) workday after having been released from the doctor, provided however a reasonable amount of time for reporting to work will be given if unusual circumstances exist and the employee has contacted the Plant Manager / Human Resources Representative or their Designee.

6.4 Departments as currently constituted are:

07 Assembly

30 Mesur-Fil Cell

44 Machine Shop

54 Maintenance

81 Shipping/Receiving/Warehouse

00 Helper

6.5 In all cases of promotion, permanent transfer, layoffs, and recalls of employees who have been laid off because of lack of work, the following factors shall be considered:

A. Seniority

B. Ability and qualifications to perform the work skillfully and efficiently.

When factor B. is relatively equal, seniority shall govern.

6.6 Bidding. When the Company establishes a new job and/or determines that a permanent vacancy exists in a job classification other than Group Leader, Journeyman or Helper, the resulting job vacancy will be filled in accordance with the following section:

A. When a permanent job vacancy exists, notice of such jobs will be posted on the main bulletin boards for three (3) working days (72 hours) not including Saturdays, Sundays and Holidays. The posting will set forth the date posted, time posted, job title, number of openings, shift, and the rate range for the job.

B. During the three (3) days that a job is posted, eligible bidders must contact the Human Resources Department to have their name placed into consideration for the jobs. Employees who are on vacation may contact the Human Resources Department prior to leaving on vacation and file a written advanced bid. The advanced bid will only be good for the specific job classification that the employee indicated on his advanced bid.

Eligible bidders are employees who have completed their probationary period prior to the posting of the job and who have not been a successful bidder for the last six (6) months.

6.7 Job Bidding Award. Each job will be awarded in accordance with seniority and ability and qualification to perform the job skillfully and efficiently as described earlier in this article, however, in the following sequence:

A. First preference for a vacancy shall be given to the eligible bidder within the same classification and department regardless of shift.

B. Second preference for a vacancy shall be given to the eligible bidder within the same department but in a different classification, and or shift.

C. Third preference for a vacancy shall be given to the eligible bidder from any other department, classification, and or shift.

When qualifications are equal seniority shall govern.

No employee shall be awarded any job unless the minimum job requirements have been met.

Minimum requirements are basically defined as education and/or experience sufficient to learn and perform the defined duties of the specific classification. The purpose is to teach the skills of the job and not the basics necessary to understand them.

A time limit for announcing a job award after closing the bids will be fourteen (14) calendar days; but should extenuating circumstances arise, vacations, shift differences, etc. and should this be required, the Chairman of the Shop Committee will be notified.

Journeyman positions are not posted, but any employee wishing to request a Journeyman Classification will be required to submit a Journeyman Request Form to their supervisor. After having received said form, the supervisor will give an answer in writing, of approved, denied, or show proficiency, to the requester. The answer shall be given within fourteen (14) calendar days or the request will be considered approved.

A time of up to sixty (60) calendar days will be given to arrange for the testing of any discrepancies (Special arrangements may be mutually agreed upon by the Company and the Union to allow for showing of proficiencies by employees.) After being approved for the Journeyman Classification an employee will have a sixty (60) day trial period for this classification. If an employee fails to perform skillfully and efficiently they will be moved back to their prior classification.

Only one request may be submitted in any six (6) month period. Requests for the training to achieve this classification will be accepted, but will be provided as workloads permit or by special arrangements agreed upon by the Company and the Union.

Helper positions are not posted when an opening is deemed by the Company to exist. Should an employee desire a helper job, the employee should make a request in writing to the Plant Manager / Human Resources Representative or their Designee for consideration.

In the event that the Company is unable to fill the vacancy pursuant to the provisions of the bidding procedure, the Company may fill the vacancy by offering it to other employees or by hiring a new employee. A vacancy that remains unfilled for three (3) months shall be considered cancelled. However, should an applicant be offered a job prior to the expiration date but report to work after, it shall not be deemed a violation of the agreement. Also vacancies that are being held awaiting trainees to finish school are not subject to this provision.

Employees that are awarded jobs and are unable to perform them skillfully and efficiently shall be removed from the job classification. They will be placed in their previous job classification if placement is made within two (2) months of the job award. This shall not apply for any reasons except where employees are unable to perform skillfully and efficiently. Provided further however, both parties agree that employees are required to continually perform skillfully and efficiently in their job classification.

An employee who has been awarded a job will be moved into the job on a Monday following the award as soon as it is practical for the Company to do so. If it is not practical for the Company to transfer the employee to the awarded job within fourteen (14) working days after it has been awarded, the employee will be officially transferred with a rate adjustment if appropriate and then temporarily loaned to his old job until he can be replaced.

When an employee is awarded a job from one job classification to another job classification he shall take all of his seniority to the new job classification.

6.8 Layoff. In the event of a reduction in the working force of a job classification, employees working within the job classification, department, and shift affected shall be displaced in reverse order of seniority.

A. Employees displaced in accordance with this section may elect to be laid off, or in the alternative, shall bump other least senior employees as follows:

1. The displaced employee shall bump the least senior employee working in the same job classification and department on another shift. If there is no one to bump, then,

2. He shall bump the least senior employee regardless of shift in an equal rated job classification in any department provided he has successfully held such job with the Company for a period of not less than three (3) months (the classification of the employee to be bumped). A ten (10) working day trial period will not be required if the classification had been held as stated. If not successful above, the displaced employee shall be given an opportunity to bump a less senior employee in any department or classification in which they have the ability to perform the minimum duties of that job. If there is a dispute as to employee’s ability to perform the job, it will be resolved by the Plant Manager / Human Resources Representative, Committee Chairman and employee prior to the bump. If the bump is allowed, a ten (10) working day trial period will be given and if the employee fails to demonstrate to the Company the ability to perform the job they shall then relinquish all rights to any other bumping option other than a less senior employee in the helper classification.

B. In no event will an employee be allowed to bump upward.

C. The Company shall give at least seven (7) calendar days notice to employees that are to be laid off, provided however that this applies only to the original employee(s) and not to employees that may be bumped as a result of the announced layoff. The Union will be given a list of the original employees to be laid off and also a list of successive laid off employees.

D. Employees who leave the Company area after being told of the layoff without making their bumping plans known to their supervisor or the Plant Manager / Human Resources Representative will be considered to have elected to be placed on layoff and that they will not exercise bumping.

E. When an employee terminates for any reason, or when an employee requests tools to be removed from Company premises, that portion of the tools that are being purchased on a payroll deduction basis by the employee will be released only to the extent that the tools have been paid for by the person. If only a portion of the tools have been paid for at layoff or termination, only that portion of the tools may be removed from the Company premises.

6.9 Recall. An employee who is laid off from his/her original job due to a reduction in force will be placed on a list for recall maintained by job classification and department in seniority order for a period not to exceed the length of service at the time of layoff, or two (2) years, whichever is less. Benefits will be reinstated the first (1^st) of the month after recall.

In the event that a job within a classification, department, and shift needs to be filled after a reduction in force, the senior eligible employee as defined in Article 6.8 “Layoff”, section A, paragraph 2, will be recalled first.

If an employee who has bumped to another job is a successful bidder, he loses all rights to his original job before the layoff.

An employee may not elect to remain on a job that was gained by bumping if he is recalled to his original job unless there is no one to be recalled, and he would not be blocking the return of a laid off employee.

At the time of the notice of layoff, if an individual elects not to bump, but accepts layoff instead, he shall have the right to return to his last level job or any higher rated job he previously held when recall occurs. He shall have no other recall rights.

6.10 Five Day Transfers. The parties recognize that from time to time disruptions caused by but not limited to the following: Absenteeism, vacations, shortages of materials, critical customer order, meeting delivery dates may necessitate the transfer of employees from their regular jobs to other jobs, on a temporary basis. First, qualified volunteers (as determined by the Department Manager) will be accepted by the Company and if additional employees are needed, then the employees will be selected with due regard to their seniority status. The parties recognize that seniority is a factor for consideration when a temporary transfer is to be made; however, the parties also recognize that from a practical point of view because of numerous such transfers necessary for efficient operation, seniority may not always be accommodated.

The five (5) day limitation shall not apply to a temporarily transferred employee who has replaced an employee who is absent or on light duty until the replaced employee returns to full duty. This period of time also does not apply when employees temporarily fill jobs that the Company is in the process of filling permanently by job posting or recall from layoff.

Helper classified employees can be temporarily transferred where there is no working employee present. Qualified transferred helpers (as determined by the Department Manager) will receive payment equal to the minimum rate of the classification of the

employee normally performing the work. Unqualified transferred helpers (as determined by the Department Manager) will be considered as “in training” and receive payment equal to the minimum rate of the lowest classification in that department. Once the transferred helper becomes qualified (as determined by the Department Manager) payment will be equal to the minimum rate of the classification of the employee being assisted or normally performing the work.

Employees temporarily transferred to other jobs will continue to receive their regular rate of pay or the minimum of the rate range, to which they are transferred, whichever is higher. In no event will the employee’s rate of pay be lowered while temporarily transferred.

6.11 Extended Transfers.

Employees may be temporarily transferred for a maximum of thirty (30) calendar days to any shift in order to complete special projects or start a new shift.

Employees may also be transferred, on a voluntary basis, to other departments for a period of not more than sixty (60) calendar days. In cases of equal qualifications, seniority will apply.

In all cases, the Union will be notified in advance of all such transfers.

6.12 Temporary Employees - The Company may hire one (1) temporary employee at a time to replace employees on vacation or medical leave of absence. The temporary employee could work only three (3) months each calendar year. The temporary employee would be paid the minimum rate of the classification of the employee they are replacing. The temporary employee shall not be eligible for any benefits provided in this agreement with the exception of scheduled holidays during their employment at the Company. Any exceptions to the above will be made by mutual agreement of the parties.

Article 7

Leave of Absence

7.1 Any employee covered by this agreement desiring a leave of absence on account of ill health, personal business or for any other good cause upon making application to the Plant Manager / Human Resources Representative or their Designee may be granted a leave of absence up to thirty (30) days and the Company may extend such leave upon request of the employee for good cause. Should any employee on leave of absence engage in any other employment he shall be terminated. A copy of all approved leaves of absence will be given to the Chairman of the Grievance Committee.

7.2 Local Union Business. For the purpose of attending conventions, conferences, meetings, and other usual and proper functions of the Union, a leave of absence without pay not to exceed two (2) weeks, unless otherwise agreed to by the parties, shall be granted to Union members provided written request is made to the Plant Manager / Human Resources Representative or their Designee as far in advance as possible and not more than one employee from a single department is gone at the same time.

7.3 Employees who are appointed to non-bargaining unit jobs with the Company after August 14, 1983, and who the Company thereafter decides to reassign to the bargaining unit must be reassigned within one (1) year from the date of appointment to the non-bargaining unit position. Such a non-bargaining unit employee who does not return to the bargaining unit on or before the end of one (1) year will be credited only with the seniority accumulated prior to leaving the bargaining unit.

7.4 The Company and the Union agree to adhere to applicable Federal laws governing leaves of absence for employees on military service.

7.5 Employees with at least five (5) years of service who are selected or appointed to a full-time office of the Union shall, upon advance written notice, be granted a leave of absence not to exceed one (1) year. Such leave may be renewed provided a written request for the extension is submitted to the Company within thirty (30) days prior to the completion of each year of leave. Such employee will continue to accumulate only his seniority while on such leave and any economic benefits will not continue nor accrue during said absence. Not more than one employee shall be granted such leave of absence at a time.

Article 8

Grievance Procedures & Arbitration

8.1 Method of Adjusting Grievances. For the purpose of this Agreement, a grievance is defined as any dispute or difference of opinion between the Company and the Union or between the Company and any employee covered by this Agreement involving the meaning, interpretation, or application of the provisions of this Agreement. When an employee is suspended without pay, he must be discharged or reinstated by written notice to the employee and the Union within three (3) workdays after the first day of the suspension. All grievances (except discharge cases which shall start at Step 2) shall be handled in the following manner:

Step 1 - Any employee who believes he has a grievance shall first present it verbally to his immediate supervisor / manager accompanied by his Committeeman if the employee so desires. If the grievance is not settled satisfactorily and the Union desires to further process the grievance, the grievance shall be reduced to writing by the Committeeman and the written grievance shall state the facts upon which it is based, when they occurred, and the specific section of this Agreement which has allegedly been violated. Such document must be signed by the employee who filed the grievance (other than the Committeeman) and must be presented to the aggrieved employee’s immediate supervisor / manager, by the Committeeman in person, not mailed, within five (5) working days following the initial contact with the supervisor / manager. The immediate supervisor / manager shall respond in writing within five (5) working days to the grievance and shall furnish a copy of such response to the Committeeman in person, not mailed.

Step 2 - If the grievance is not settled in Step 1, and the Union desires to further appeal, a committeeman shall appeal in writing and give the grievance in person, not mailed, to the Department Manager within three (3) working days after the answer in Step 1 has been given. A meeting between the Department Manager and the Committeeman shall be held at a mutually agreeable time. The Department Manager shall give the Company’s written answer on the grievance to the Committeeman in person, not mailed, within three (3) working days following the meeting.

Step 3 - If the grievance is not settled in Step 2 and the Union desires to further appeal, the Chairman of the Grievance Committee shall appeal in writing and give the grievance to the Plant Manager / Human Resources Representative or

their Designee in person, not mailed, within three (3) working days after the answer in Step 2 has been given.

The Plant Manager / Human Resources Representative or their Designee shall contact the International Representative and a meeting to discuss the grievance shall be held at a mutually agreeable time. Within five (5) working days following the meeting the Plant Manager / Human Resources Representative or their Designee in person, not mailed, shall give the Company’s final written answer to the Chairman of the Grievance Committee.

If the grievance is not settled in Step 3 above and the Union desires to appeal the grievance to arbitration, the International Representative of the Union shall give written notice of the Union’s desire to arbitrate to the Plant Manager / Human Resources Representative or their Designee within five (5) working days of the date of the Company’s final answer in Step 3 above.

Such written notice shall identify the specific grievance appealed to arbitration and the specific section or sections of this Agreement allegedly violated. If the Company and the Union cannot agree to an arbitrator, the parties shall send a joint letter to the Federal Mediation and Conciliation Service requesting said agency to submit a list of five (5) arbitrators, specifying that such arbitrators be members of the National Academy of Arbitrators. Upon receipt of such list, the Union and the Company shall strike two names there from and the arbitrator whose name is not struck shall be deemed selected and a joint letter of selection shall be sent to that arbitrator. The party that strikes first will be determined by the Union’s Business Representative and the Company’s Representative In either case, the joint letter of selection shall identify the specific issue involved in the grievance and shall request that the arbitrator select a date for hearing subject to availability of Company and Union representatives.

The arbitrator shall only have the power and authority to interpret and apply the provision of this Agreement to the grievance presented and his decision shall apply only to the specific issue identified in writing to him. The arbitrator shall have no authority to alter, amend, modify, nullify, ignore, or add to the provisions of this Agreement. Copies of all arbitration awards shall be given to the Company and the Union. The award of the arbitrator shall be final and binding upon the Company, the Union and the employee or employees involved. The expenses of arbitration shall be shared equally by the Company and the Union. Other expenses incurred such as preparation of briefs and data to be presented to the arbitrator and furnishing of witnesses other than employees shall be borne separately by the respective parties.

8.2 Time Limits. No grievance shall be entertained or processed unless it is submitted to the Company, in writing within five (5) working days of the event giving arise to the grievance. Any grievance not appealed within the time limits set forth in each step of the grievance procedure shall be considered settled on the basis of the last answer given by the Company. Any grievance not entertained or processed by the Company within the time limits set forth in each step of the grievance procedure shall be considered settled on the basis of the last action requested by the Union within the confines of the current agreement. Either party may request of the other party a reasonable extension of the time limits as outlined in this section.

8.3 Grievance Investigation and Presentation. The Union shall furnish to the Company a certified list of elected officers and Committeemen. The Committeemen shall consist of not more than two (2) employees from the plant on the day shift.

One Committeeman may be named by the Union for other shifts when at least 8 bargaining unit people are employed on such shift. One of the above day shift Committeemen will be named by the Union as Chairman of the Grievance Committee. The Chairman of the Grievance committee shall be permitted to attend the second step of the grievance hearing if deemed necessary by them and a request is made in advance by the Chairman of the Grievance Committee to the Plant Manager / Human Resources Representative or their Designee.

It is the intent and desire of the Company and the Union that the investigation and discussion of grievances will be conducted in accordance with the grievance procedure set forth in this article and in a manner which minimizes lost time and interference with production. Committeemen shall not engage in solicitation of grievances and shall not leave their workstations without receiving permission from their immediate supervisors. Upon entering another department, they shall inform the supervisor of such department of the nature of their business. The Union agrees that the Company has the right to expect that supervisors will know the whereabouts of their employees throughout the day. Accordingly, employees and Committeemen must notify the supervisor prior to leaving their department or stopping work to discuss grievances. Permission to leave or stop working will not be unnecessarily withheld. But, critical production requirements may necessitate the rescheduling of discussion concerning grievances which do not demand immediate attention.

8.4 The Union will be provided with a copy of any disciplinary action issued to a bargaining unit employee within the shift that it was issued, or as soon thereafter as possible.

8.5 Notwithstanding, anything herein or in the general body of labor law to the contrary, it is understood and agreed that any disciplinary action by the Company after the date hereof shall not be affected by the past practices of the Company or by any alleged prior inconsistent application of the Company’s rules, if prior to the date hereof.

8.6 In the event that the Company should discharge or suspend an employee during the time of this Agreement, and it is thereafter determined by agreement of the parties or in arbitration that such employee is entitled to compensation for the period of time (or any part thereof) after such action by the Company, then, in such case, the compensation due to such employee shall be reduced by the total of all accrued compensation earned and/or unemployment compensation received.

8.7 The Company agrees to continue the monthly meeting with the first shift Committeemen and the Plant Manager / Human Resources Representative or their Designee on the second Tuesday of each month. The date may be changed for each monthly meeting by mutual agreement between the Company and the Union.

8.8 All grievances including arbitration shall be handled during regular working hours without loss of time to the Committeeman or directly involved employees.

Article 9

Vacation

9.1 Each employee with one (1) year and less than eight (8) years of continuous service as of January 1 shall be eligible for two (2) weeks vacation. Employees with less than one (1) year of continuous service each January 1 shall be eligible for two (2) weeks vacation after their anniversary date. Each employee with eight (8) years and less than fifteen (15) years of continuous service as of January 1 shall be eligible for three (3) weeks vacation. Each employee with fifteen (15) years and over of continuous service as of January 1 shall be eligible for four (4) weeks vacation. An employee who during the year after January 1 reaches eight (8) years shall be eligible for the third week on January 1 of that same year. An employee who during the year after January 1 reaches fifteen (15) years shall be eligible for the fourth week on January 1 of that same year. Employees shall schedule their vacation during the calendar year at the time that they are eligible and at a time that the Company approves.

9.2 An employee who is eligible for vacation benefits shall be paid their benefits if they leave the Company for any reason whatsoever except quit with no notice, and provided he has not already received his vacation pay. Employees that have received a portion of their vacation during the calendar year shall be entitled to the remainder. Employees that voluntarily quit must give the Company at least one (1) weeks notice to be eligible to receive vacation pay.

9.3 Vacation pay will be computed on the basis of two (2) percent of the employee’s previous calendar year’s W-2 wages or 40 hours of straight time pay, whichever is higher, for each week of vacation eligibility. Work credit shall not be given for any type of absences including worker compensation.

Length of Vacation		Vacation Pay
1 Week		2% or 40 Hours whichever is greater
2 Weeks		4% or 80 Hours whichever is greater
3 Weeks		6% or 120 Hours whichever is greater
4 Weeks		8% or 160 Hours whichever is greater

Vacation pay for an employee’s first vacation after completing one (1) year of continuous service shall be computed on the basis of the employee’s earnings, described above, received during the one (1) year period immediately preceding his anniversary date. Vacation pay for subsequent vacation shall be computed on the basis of the employee’s earnings received during the calendar year preceding the year in which the employee becomes eligible for vacation.

9.4 Vacation Eligibility Period shall mean the calendar year January 1 to December 31st; provided however, that the vacation eligibility period for a new employee’s first vacation will be the twelve (12) consecutive months immediately preceding his anniversary date. (Example - a new employee is hired March 14, he is eligible for the first vacation March 15 of the following year.)

9.5 Vacation time may be scheduled by the employee at any time during the calendar year after becoming eligible and at a time that the Company approves. The Company

shall consider the seniority and the job classification of employees when making vacation scheduling decisions. The Company will solicit vacation preference from each employee on or before February 1st of each year. Should an employee elect not to schedule his vacation when contacted by the Company, his vacation must be scheduled by his supervisor. After all employees have received their full week first choices, employees electing to split their vacations may then choose from the remaining vacation times.

9.6 After the master vacation schedule has been turned in to the Human Resources Department, a change may still be made by the employee by the following procedure:

A. Employee obtains “Request for Vacation Change Form”.

B. Employee obtains written approval from his supervisor by using form.

C. Employee sends approval form to Human Resources Department.

9.7 Employees that change job classification and/or shifts shall have their vacation schedule changed to accommodate the workload and to work around employees who already have their vacation scheduled if necessary without regard to seniority.

9.8 Vacations may be scheduled in 1, 2, 3 or 4 day increments when approved in advance by the Company. This will be permitted only after all full week vacation requests which are submitted between January 1st and February 1st each year are considered according to Art. 9.5. Payment for such day(s) will be pro-rated and paid on the following payday.

Otherwise, vacations must be scheduled in one (1) week blocks (five work days) with a Monday week starting date. Employees shall not be required to work Saturday or Sunday during their vacation week nor the Saturday or Sunday of the preceding week, however they shall be charged overtime as though worked.

9.9 Employees shall not schedule their vacation at the end of one calendar year and at the beginning of the next calendar year so as to take a vacation from two years together.

9.10 Employees may elect to receive vacation pay in lieu of time off for one (1) week of eligible vacation time. This applies to full week vacations only. However all other eligible vacation time must be taken during the calendar year or employees will lose their

vacation benefit. The Company may also allow, at its discretion, pay in lieu of up to a maximum of 3 weeks.

9.11 Employees who elect to receive one (1) week of vacation pay instead of time off must notify the Company of such request, and payment will be made on payday of the following week. Pay for the one (1), two (2), three (3) or four (4) day vacations shall be given to employees as described in 9.8. All other vacation pay shall be given to employees on their last payday before leaving on vacation provided the Human Resources Department is notified in writing at least seven (7) days prior to the first day of vacation. Should an employee decide, on his very first vacation, to schedule it immediately after completing one (1) year of continuous service, his check will not be given to him until the third payday after his anniversary date. Also, pay for subsequent vacation, if scheduled during the first or second week of the calendar year, will be received by the employee the third payday of January.

9.12 Any Holiday (as defined in Art. 10.1) occurring during an employee’s vacation shall be recognized on the workday immediately following the employees vacation, or payment (as defined in Art. 10.2) may be received in lieu of time off, if the employees’ supervisor is notified by the last work day preceding the vacation.

9.13 If an employee dies while on the payroll of the Company, vacation pay as provided in this Article shall be paid to their legal heir or estate.

Article 10

Holidays & Paid Personal Time Off

10.1 Holidays Observed. During the term of this Agreement, the following days shall be considered Holidays:

Good Friday		Friday after Thanksgiving
Memorial Day		Christmas Eve
Fourth of July		Christmas Day
Labor Day		New Year’s Day
Thanksgiving		Paid Personal Time Off (PPTO) (2 Days)

10.2 Holiday and Eligibility. Employees, not on layoff or leave of absence when a Holiday occurs, shall receive Holiday Pay equal to eight (8) times their regular straight time hourly rate including any applicable shift and or group leader premiums for all Holidays (as defined in Art. 10.1). Employees must work all scheduled hours on their last scheduled workday prior to the Holiday, or on their next scheduled workday following their Holiday unless the absence is due to sickness or injury supported by proper evidence, or any other leave for which the employee is receiving pay under appropriate provisions of this agreement.

10.3 Weekend Holidays. Holidays, excluding the floater, falling on Sunday shall be observed on the following Monday. Holidays falling on Saturday shall be observed on the preceding Friday. If two consecutive Holidays fall on Friday and Saturday, the Holidays will be observed on Thursday and Friday. If two consecutive Holidays fall on Sunday and Monday, the Holidays will be observed on Monday and Tuesday.

10.4 Holidays and Overtime. Employees who receive Holiday pay for unworked Holidays pursuant to this Article shall be regarded as having worked eight (8) hours on Holiday for the purpose of computing premium for subsequent hours worked during the same workweek.

10.5 Employees are eligible for all Holidays immediately on employment with the Company, with the exception of new hires, who will be eligible for only one PPTO day during their first six months of employment.

10.6 The paid personal time off (PPTO) may be taken by the employee at any time during the calendar year by providing at least thirty (30) minutes notice prior to the beginning of the employees shift.

Employees may elect to receive pay in-lieu-of PPTO. If an employee elects this option, the pay in-lieu-of PPTO will be paid in the following weeks pay period. PPTO may be scheduled in four (4) or eight (8) hour increments.

Article 11

Pension Plan

Commencing with the effective date of this Agreement, and continuing until the expiration date herein provided, the Company agrees to provide the defined benefit pension plan for eligible employees as described in addendum A “Pension Plan for Wichita Clutch Employees of the International Association of Machinists and Aerospace Workers, AFL-CIO, and Aeronautical Industrial District Lodge 776, Local Lodge 2771”. The parties also agree to amend the Pension Plan as required by the Tax Reform Act of 1986 and any other statutory requirements or agreed to changes.

Article 12

Group Insurance

12.1 The following insurance program is provided for employees only:

A. Life Insurance:

Effective	Benefit Amount
October 1, 2004	$	35,000
October 1, 2005	$	40,000
October 1, 2006	$	45,000

B. Accidental Death and dismemberment:

Effective	Benefit Amount
October 1, 2004	$	35,000
October 1, 2005	$	40,000
October 1, 2006	$	45,000

C. Weekly Sickness and Accident (non-occupational) - $300.00 per week for 16 weeks (3-day waiting period) for sickness unless hospitalized; first day payment for off-the-job accident) for all labor grades.

12.2 For Employees and Dependents:

The Colfax Group Health / Vision PPO through Anthem Blue Cross Blue Shield, and the Colfax Delta Dental program will be effective October 4, 2004. The details of the entire program of insurance benefits will be set forth in booklets to be issued to covered employees.

12.3 Employee Weekly Contribution Rates

	Year 1 (Oct 1, 2004)		Year 2 (Oct 1, 2005)		Year 3 (Oct 1, 2006)
Associate	$	17.92	$	20.61	$	23.70
Associate +1	$	35.84	$	41.22	$	47.40
Family	$	51.97	$	59.77	$	68.74

The Company agrees that if during the term of the agreement the Wichita Falls salaried associates’ contribution rates fall below those listed above, for the same benefit schedule, the bargaining unit members’ rates will be adjusted to be identical to the salaried associate’s rates.

Retail Prescription Drug Employee Co-Pay

	Year 1 (Oct 1, 2004)		Year 2 (Oct 1, 2005)		Year 3 (Oct 1, 2006)
Tier 1	$	8.00	$	8.00	$	8.00
Tier 2	$	15.00	$	15.00	$	15.00
Tier 3	$	30.00	$	30.00	$	30.00

Mail Order Prescription Drug Employee Co-Pay

	Year 1 (Oct 1, 2004)		Year 2 (Oct 1, 2005)		Year 3 (Oct 1, 2006)
Tier 1	$	16.00	$	16.00	$	16.00
Tier 2	$	30.00	$	30.00	$	30.00
Tier 3	$	60.00	$	60.00	$	60.00

12.4 Future Retirees: Effective for retirees after August 8, 1998 the Company will pay $20.00 per month toward Medicare for retirees 65 and older. Early retirees may elect to stay in the group hospital medical program by paying their own monthly premium until age 65.

Article 13

Wages

13.1 The list of job classifications and corresponding labor grades and the rate schedule are set forth in Addendum “B” and attached hereto and made a part hereof, as though fully written herein.

Listed rates will reflect the following wage increases across the board for all labor grades:

+3.75% Increase per hour effective August 9, 2004

+3.75% Increase per hour effective August 8, 2005

+3.50% Increase per hour effective August 7, 2006

Effective Date of Progression Rate Increases - The effective date of each progression increase will always be on a Monday. The Monday effective date of each progression increase depends on where the three (3) month period is completed and will be administered as follows:

3 Month Period Completed		Effective Date of Progressive Increase
Monday		Same Monday
Tuesday		Prior Monday
Wednesday		Prior Monday
Thursday through Sunday		Next Monday

The above applies to the three (3) month period completed after the effective date of an employee’s last increase (excluding annual increase), a new hire completing three (3) months from his employment date, or the completion of a three (3) month period after the effective date of a promotion. The three (3) month progression period shall be extended only by the amount of all absences from work of thirty (30) consecutive days or more. Each increase shall be in the amount of ten cents (.10c) for every three (3) months until the maximum is reached. If ten cents (.10c) would take an employee over the maximum, then the employee will receive only the maximum rate for the classification.

13.2 Shift Premium. Second shift employees shall receive a premium of fifty cents (.50c) per hour and third shift employees shall receive a premium of fifty cents (.50c) per hour in addition to their regular straight time hourly rate.

13.3 Group Leader Pay. All Group Leaders may receive fifty cents (.50c) more than the highest employee over whom they are responsible. For pay purposes, a Group Leader may not be responsible for another Group Leader.

13.4 Job Description. The Company and the Union agree that the manual of job descriptions discussed in negotiations is a part of the contract but will be maintained in a Manual B-2 separate from the contract booklet.

13.5 Successful Bidder. Employees who successfully bid on vacancies in higher rated

classifications shall, upon moving to their new job, commence to receive a rate within the rate range which is at least equal to their former rate. Any successful bidder to a higher labor grade than job classification prior to successful bid will receive at least ten cents (.10c) per hour rate adjustments unless it would cause rate to be outside rate range. The adjustment shall be more than ten cents (.10c) if needed to reach the minimum of the rate range. Employees who successfully bid on vacant positions in lower rated classifications shall, upon moving to their new classification, receive a rate within the rate range which is closest to but does not exceed their former rate of pay. Employees who successfully bid on vacant positions in equal rated classification shall continue to receive their former rate of pay if it falls in that rate range.

13.6 Bumped/Displaced. Employees who are displaced from their jobs and bump other employees shall be paid as follows: If the employee bumps to a classification in a labor grade which is equal to his labor grade, he shall receive the same rate of pay if it falls in that range. If the employee bumps to a classification in a lower labor grade, he shall receive the rate in the lower labor grade that does not exceed the rate which he was receiving in his regular labor grade, but is within the lower labor grade rate range.

13.7 Bereavement Pay. In the case of the death of an employee’s current spouse, parent, stepparent, child, stepchild, brother, stepbrother, sister, stepsister, mother-in-law, father-in-law, current son in-law, current daughter in-law, grandparents, spouse’s grandparents or employee’s grandchildren, the affected employee, upon making written application to his/her supervisor, shall be entitled to receive pay at eight (8) times his regular hourly rate of pay, excluding overtime, for not more than three (3) days absence from work to attend the funeral. This provision does not apply to the employee who is on layoff or leave of absence.

Employees claiming bereavement pay will be required to submit proof which is deemed satisfactory by the Company concerning the death and family relationship. Employees who falsely claim bereavement pay shall be discharged. The intent is to provide paid leave for necessary time to take care of and attend the funeral. It is not intended to provide time for other purposes.

13.8 Jury Pay. Employees who are subpoenaed for jury service and who serve as a juror shall receive eight (8) hours at regular hourly straight time rate, including the employee’s regular shift premium, if any and he may keep the amount received as jury pay, but in no case shall the total pay from the Company exceed forty (40) hours pay per week at regular hourly straight time rate. The employee must present proof of service from the court. Night shift workers scheduled for jury duty will not be required to work if they

actually serve on the jury during the day. Hours paid for pursuant to this section shall be considered hours worked for the purpose of computing overtime premium for subsequent hours worked within the same work week.

13.9 Call Back and Reporting Pay. An employee who reports for work as scheduled without having been notified otherwise that there will be no work shall be given a minimum of four (4) hours work or shall receive four (4) hours pay at the appropriate rate. This however, does not apply where the failure to provide work results from emergencies beyond the control of the Company, such as major accidents, fires, storms, floods, power failures, or other similar events. The Company shall pay reporting pay however for other reasons unless the employee was notified in advance by the Company. The Company shall be obligated to call by telephone to the last number provided to the Human Resources Department by the employee. Whenever an employee reports for work and is offered work by the Company in other job classifications and the employee refuses such work, he shall not receive any reporting pay. If the employee accepts and performs such work he shall receive his regular rate of pay. Whenever an employee reports for work and starts working and the Company is unable to give him four (4) hours of work in his regular job classification and department, but offers other work which is refused by the employee, he shall be paid only for the hours actually worked at his regular hourly rate of pay.

Employees who are called back to work after completing their scheduled work shift and after they have left the Company’s premises will be given a minimum of four (4) hours work or four (4) hours pay at time and one-half (1 1/2). Provided further, however, that should the hours paid at time and one-half (1 1/2) extend beyond the normal reporting time straight time shall apply.

13.10 Emergency Service Away From Shop. Employees assigned to work at the Company shop under the terms of this Agreement may be assigned to work away from the shop. When so assigned they will be paid at their regular rate for all time spent in traveling in the employee’s conveyance, or in traveling in a car or truck furnished by the Company. If they travel by common carrier, or in transportation furnished by the Company, except the Company’s car or truck, they shall be paid eight (8) hours pay for each twenty-four (24) hours of travel time. Such employees, if they are required to wait at the place where they are told to work away from the plant for parts or equipment, will be paid the amount of time which they wait, not to exceed however, eight (8) hours for each twenty-four (24) hours of such waiting. If their travel time is done or waiting is done on Saturday or Sunday, they will be paid on the same basis as though such work were done at the plant of the Company on these particular days. The employee shall also be allowed reasonable expenses for traveling, meals and lodging while away from the

Company shop.

Article 14

Training of Apprentices

The Company and the Union agree to continue the apprenticeship standards, which have heretofore been planned by them and the Federal Apprenticeship Committee, unless such plans are changed by mutual agreement.

Article 15

Non-Employee Trainees

Employees or other individuals who maintain or contract to maintain equipment of the Company, or employees of other individuals, corporations or governments, who have bought the Company’s equipment and who wish to train their men to operate or service and/or maintain such equipment, shall be permitted to perform actual work done in the maintenance and/or operation or repair in the shop or plant of the Company. It is understood, however, that in the performance of such actual work those persons (who are known as trainees) are not to replace any employee of the Company in the performance of such work, it being intended that such regular employees may stand and assist and/or supervise the work of the trainee. Although the Company may subcontract under the provision of Article 18 this Article is not intended for such purpose.

Article 16

Safety & Health

16.1 The Company and the Union agree to cooperate in carrying on a program to eliminate hazards to employee’s safety and health during working hours. The Company shall institute and maintain all reasonable and necessary precautions for safeguarding the health and safety of its employees. The Company and Union, as well as all employees, recognize their respective obligations to assist in the prevention, correction, and elimination of hazardous work conditions and practices.

16.2 Insofar as practical all matters of occupational safety and health shall be handled between the employee and his immediate supervisor. It is agreed by the Company and the Union that all employees injured on the job, regardless of how minor the injury may be, must immediately report the injury to his immediate supervisor. Failure to do so may result in disciplinary action. The supervisor shall obtain first aid for such employee and in case of an emergency requiring an ambulance, one will immediately be called.

16.3 First aid facilities shall be maintained by the Company and qualified first aid attendants as required by law will be trained and available.

16.4 Employees injured on the job, treated on the same day of injury by a physician, and who are unable to return to work that same day as certified by a physician, shall be paid for the balance of their shift up to and including eight (8) hours at their regular straight time hourly rate.

16.5 If an employee is injured on the job and is required by the physician to return after the date of his injury and after he returns to work, he will be allowed pay for time lost for up to four (4) hours if necessary to see the physician. In no event however, shall an employee be eligible for pay for lost time, when totaled with time actually worked, will equal more than eight (8) hours pay at the employee’s regular straight time hourly rate. The Union and the employees agree that such return visits must be attempted to be scheduled by the employee at a time that will cause him to miss the least time from his work schedule and that his return visit will be coordinated in advance with the Company’s Industrial Medical Technician. The Union agrees that the employee shall cooperate with the Company’s Industrial Medical Technician to reschedule the return visits should the Company want to try to do so by contacting the physician. Employees shall be granted reasonable time necessary for personal cleanup prior to leaving the Company premises for a doctor’s appointment. Employees may leave the Company’s premises no earlier than thirty (30) minutes prior to the appointment time and will return no later than thirty (30) minutes after the doctor’s visit. This section is intended for return visits to local physicians and for employees that are continuing to work.

16.6 Cool drinking water shall be furnished at all times and sanitary drinking fountains shall be maintained. All Company machines and tools shall be maintained in a safe condition. Floors, lockers, locker rooms, toilets and washrooms shall be kept in a dry, clean and sanitary condition and lighted and heated in the best manner consistent with plant facilities. The Company and the Union agree to cooperate in every reasonable

manner to eliminate all unsafe practices, to reduce industrial accidents to a minimum and to maintain efficient plant operation.

16.7 The Company and the Union shall continue with their Safety Committee. The Committee shall consist of one (1) Union Representative and one (1) Company Representative. The Company shall designate its representative to act as Chairman of the Safety Committee. Said Committee shall schedule regular meetings every two (2) months at their respective locations for the purpose of discussing safety measures. It is recognized that recommendations shall be of an advisory nature. The Committee will also conduct an inspection tour at each meeting called by the Chairman of the committee. The Chairman shall make written reports of each meeting and send them to the Plant Manager / Human Resources Representative or their Designee. The Union agrees to give the Company’s Plant Manager / Human Resources Representative or their Designee the name of the employee appointed to the Safety Committee at least three (3) months in advance of a change.

16.8 At the discretion of the Company, employees returning to work or when medical findings point out that they could return after being off due to an industrial accident may be required to take a physical examination. When so required the examination shall be paid for by the Company and shall be conducted by a physician selected by the Company. Should the employee’s Doctor and the Company’s Doctor have a difference of opinion, the Chairman of the Grievance Committee and the Plant Manager / Human Resources Representative shall meet in an effort to settle the issue. Should the issue not be settled the two shall select another Doctor, who is a specialist in the area of specialization needed, and his opinion shall be binding. The doctor’s expense shall be paid by the Company.

16.9 All employees are required to use and wear necessary protection equipment and apparel when so directed by the Company.

Safety toe shoes are required in all job classifications. The Company will reimburse up to $75.00 per calendar year or up to $150.00 for a two-year calendar period for one pair of safety shoes per employee.

16.10 The Company and the Union agree that when medical examination shows that an employee must change jobs that the Plant Manager/Human Resources Representative or their Designee and Chairman of the Grievance Committee shall meet to discuss a favorable remedy. Every reasonable effort will be made by the Company to place the

employee if he must change jobs on a job equally rated. If this cannot be done then every reasonable attempt will be made to place him on a job rated as high as possible. The Union agrees that if a satisfactory arrangement can be made by the Plant Manager/Human Resources Representative or their Designee and the Chairman of the Grievance Committee that the job will not have to be posted. The Company shall not be required to create work or a job for this purpose.

16.11 Protective Glasses. The Company shall provide each employee with a pair of non-prescription protective glasses without cost to the employee. For those employees that require prescription glasses, the Company will fill the prescription with an initial pair of safety glasses. No additional glasses will be furnished for this individual until two years later when the second pair of prescription glasses will be furnished.

Each year thereafter, the Company will pay one-half (1/2) the cost to fill such employee’s prescription provided there has been a significant change in vision or, the Company will pay the entire cost of the new glasses if two years has passed between prescription change.

Article 17

Bulletin Boards

The Company shall maintain a bulletin board for the Union’s use. Such bulletin board shall be used only for posting notices of legitimate Union business, Union meetings, Union elections and appointments, results of Union elections and Union social activities. All notices must be submitted to the Plant Manager / Human Resources Representative or their Designee for approval before posting. No other place on Company property shall be used by the Union for posting of notices, advertisements, or information of any kind.

Article 18

Subcontracting

The Company agrees that during the term of the Agreement no work usually performed by the employees covered by the Agreement will be sub-contracted to another Company if the scheduled workweek of such employees is less than 40 hours or if there are qualified employees then laid off provided this restriction shall not apply if such contracted

outside work requires machinery, equipment, or facilities not owned or operated by the Company, or if the work can be done more economically, and/or timely to meet the delivery requirements of the customers. It is understood, however, that the Company shall determine which products or portions thereof it shall make and which it shall have made by others.

Article 19

Union Security & Check Off

19.1 During the term of this contract the Company agrees that it will deduct from the first paycheck of each month, and remit to the Financial Secretary of the Union, all dues of all employees eligible for union membership who voluntarily execute a revocable dues deduction authorization and cause it to be placed in the hands of the employer. Such authorization shall be upon forms provided by the Union and shall be signed by the individual employee before they are placed in the hands of the Company for the deduction. Such authorization forms shall be made upon cards in a size and form mutually agreed upon between the Union and the Company.

19.2 Deductions shall be made on account of initiation fees or reinstatement fees from the first paycheck of the employee after receipt of the authorization.

19.3 If an employee has no earnings in the pay period in which the deduction is scheduled to be made, then the deduction shall be made from the first paycheck of the month in which this employee has earnings.

19.4 Employees who voluntarily execute deduction authorizations are bound by the above mentioned provisions unless or until voluntarily cancelled by the employee in writing to the Company and to the Union. Nothing herein contained shall be construed to require membership in the Union as a condition of employment with the Company and this Agreement shall not abridge the fundamental right of an employee to determine for himself, free of intimidation, coercion or discrimination from any source, whether or not to be a member of the Union.

19.5 The authorization Form listed below shall be the agreed form and no deduction shall be made until fully executed by the employee and presented to the Human Resources Department.

Dues Authorization Card

NAME CLOCK NO. DEPT.

I hereby authorize Wichita Falls Plant, Warner Electric, LLC., or its Successor to deduct from my wages, each and every month, commencing with next payroll period an amount equivalent to dues as shall be certified by the Secretary-Treasurer of District Lodge 776 of the International Association of Machinists and Aerospace Workers. I further authorize the company to deduct from my wages a designated sum in payment of initiation fees when notified in writing to do so by the Secretary-Treasurer of the Lodge. The sums to be deducted are hereby assigned by me to District Lodge 776 of the International Association of Machinists and Aerospace Workers and are to be remitted by the company to the Secretary-Treasurer of District Lodge 776.

This authorization and assignment is voluntarily made in consideration for the cost of representation and collective bargaining and is not contingent upon my present or future membership in the Union. This authorization and assignment shall be effective and irrevocable for a period of one (1) year from the date of execution or until the termination date of the collective bargaining agreement between Wichita Falls Plant, Warner Electric, Inc., or its Successor and District Lodge 776 of the International Association of Machinists and Aerospace Workers, whichever occurs sooner.

Further, this authorization and assignment shall continue in full force and effect from year to year beyond the irrevocable period set forth above, and this authorization and assignment shall be effective and irrevocable in each subsequent year unless revoked by me within ten (10) calendar days prior to the date of termination of any irrevocable period hereof. Such revocation shall be effected by written notice, sent by certified mail, return receipt requested, to the company and the Union within such ten (10) day period.

Contributions or gifts to the International Association of Machinists and Aerospace Workers are not tax deductible as charitable contributions for federal income tax purposes. However, such contributions or gifts may be tax deductible under other provisions of the Internal Revenue Code.

SIGNATURE

DATE

19.6 The Company’s obligation to make deductions shall terminate in the event an employee for any reason shall cease to be a member of the bargaining unit. Should at a later date the person become a bargaining unit member again, a new authorization card must be given to the Company to cause deduction to be made again.

19.7 Before the authorization card will be accepted by the Company it must be completed in its entirety and must be readable. Special attention must be paid to the employee number and full name of the employee. Cards that are not properly filled out or cards that cannot be read shall not be accepted by the Company.

19.8 The Union shall indemnify the Company and hold it harmless against any and all suits, claims, demands and liabilities which arise out of or by reason of any action taken or not taken by the Company for the purpose of complying with any of the provisions of this section.

Article 20

Union Representation

The Business Representative or Representatives of the International Union shall have access to the Company’s plant during working hours for the purpose of investigation of grievances. He shall obtain from the Company specific authorization for each visit and such visit shall be subject to such regulations as may be made from time to time by the Company. The Company will not impose regulations which will exclude the International or Business Representative from its plant, nor render ineffective the intent of this provision.

Article 21

Increased Efficiency

The Union agrees to use its best efforts to support all of the Company’s efforts to increase the efficiency of the Company’s employees who it represents.

Article 22

Negotiating Committee

The Company agrees that it will pay the employees that represent the Union at contract negotiations time during the life of the contract, for up to eight (8) hours pay at their regular straight time rate of pay for each day of negotiations. The Union agrees that the employees that represent the Union in negotiations for a new contract will not be more than two (2) in numbers.

Article 23

Successor

This contract and the letters of intent negotiated by the Company and the Union in 2001 shall be binding upon the successors, assignees, and legal representatives of each of the parties hereto.

Article 24

Termination of Previous Agreement

This agreement shall supersede all previous agreements whether oral or written, made between the parties, except as provided for under the terms of this written agreement.

Article 25

Waiver & Entire Agreement

Neither the Company nor the Union shall be obligated to negotiate or bargain on any matter of any nature whatsoever not covered by the provisions of this Agreement, during the life of this Agreement.

In the event that any provision of this Agreement shall be declared void or illegal by a court of competent jurisdiction, such provision shall become inoperative but all other provisions of this Agreement shall remain in full force and effect for the duration of this Agreement.

Any portion of this agreement may be amended if mutually agreed upon in writing by the “Company” and the “Union” in accordance with Federal Labor laws and O.S.H.A. rules and regulations.

Article 26

Distribution of Agreement

The Company shall have copies of the collective bargaining agreement printed and distributed to each full time employee covered by the agreement within forty-five (45) days of the ratification of the Agreement.

Article 27

Term of Agreement

This Agreement shall remain in full force and effect until August 10, 2007 and shall thereafter be continued for yearly periods unless notice of termination is given in writing by registered or certified mail by either party to the other at least sixty (60) days before August 10, 2007 or any subsequent annual expiration date.

FOR THE UNION:

Paul Black

IAM Business Representative

Bill Land

Chief Steward IAM

David Thames

Negotiating Committee IAM

FOR THE COMPANY:

Mark Stuebe

General Manager - Wichita Clutch

Tim McGowan

V.P., Human Resources - Colfax PT Group

Eric Michaeli

Manufacturing Manager – Wichita Clutch

Brian Williams

Materials Manager – Wichita Clutch

Addendum B

Job Classifications

Job Title	Grade	Job Code
Journeyman Machinist	10	44-4
Journeyman Maintenance	10	54-4

Journeyman Assembler	9	07-4

Assembly Mechanic A	8	07-1
Cell Operator A	8	30-1
Machine Operator A	8	44-1
Maintenance A	8	54-1

Shipping/Receiving/Warehouse A	7	81-1

Assembly Mechanic B	6	07-2
Cell Operator B	6	30-2
Machine Operator B	6	44-2
Maintenance B	6	54-2

Shipping/Receiving/Warehouse B	5	81-2

Assembly Mechanic C	4	07-3
Cell Operator C	4	30-3
Machine Operator C	4	44-3
Maintenance C	4	54-3

Shipping/Receiving/Warehouse C	3	81-3

Helper	2	00-0

Rate Structure

Effective August 9, 2004

Grade	Minimum		Maximum
10	$	19.47	$	19.47
9	$	18.19	$	18.19
8	$	15.73	$	16.93
7	$	15.13	$	16.15
6	$	14.17	$	15.07
5	$	13.13	$	13.86
4	$	12.23	$	12.84
3	$	11.87	$	12.30
2	$	10.77	$	11.53

Effective August 8, 2005

Grade	Minimum		Maximum
10	$	20.20	$	20.20
9	$	18.87	$	18.87
8	$	16.32	$	17.56
7	$	15.70	$	16.76
6	$	14.70	$	15.64
5	$	13.62	$	14.38
4	$	12.69	$	13.32
3	$	12.32	$	12.76
2	$	11.17	$	11.96

Effective August 7, 2006

Grade	Minimum		Maximum
10	$	20.91	$	20.91
9	$	19.53	$	19.53
8	$	16.89	$	18.17
7	$	16.25	$	17.35
6	$	15.21	$	16.19
5	$	14.10	$	14.88
4	$	13.13	$	13.79
3	$	12.75	$	13.21
2	$	11.56	$	12.38

Addendum C

8-9-04

Letter of Intent

Mr. Paul Black

I.A.M. Committee

Reference: Company Flowers

The Company will continue to send flowers as a result of the following situations:

A. Employees who are hospitalized

B. Deceased employee’s funeral

C. Member of employee’s family hospitalized

D. Deceased family member’s funeral

Please contact the Human Resource Department to arrange for flowers to be sent at the proper time.

Mark J. Stuebe

General Manager

Wichita Clutch

Addendum D

8-9-04

Letter of Intent

Mr. Paul Black

I.A.M. Committee

Reference: Sub-Contracting

During this contract negotiation, the subject of outside contracting and its current and potential effect on the workforce was discussed at length. Any arbitration decision rendered that covers a period of the previous contract will be honored, but this Letter of Intent will supersede any period of time hereafter.

The Company desires to assure the Union that we have every intent to stabilize the workforce for the job security of our employees. While it is impossible to guarantee employment, we fully appreciate the apprehension of the Union caused by the nature of our business.

The nature of our operations demands that we continue our present practice on sub-contracting. However, the Company will, during periods of layoff, meet with the Union upon its request once each month, with or without the necessity for a grievance, to discuss outside contracting with the objective of returning to normal employment levels as soon as practical, and to discuss the economies, lead times, or other necessary business reasons.

Considerations used when sub-contracting include the operational needs of the business, the efficiency and the economics involved, as well as any adverse effect upon the employment of our people, including those on layoff.

The Company is committed to the concept of stabilizing the workforce, and it is understood that in many instances it will be to our mutual advantage to utilize our own equipment and manpower first.

Mark J. Stuebe

General Manager

Wichita Clutch

Addendum E

8-9-04

Letter of Intent

Mr. Paul Black

I.A.M. Committee

Reference: Cycle Counting

The parties have discussed the matter of cycle counting during these 2001 negotiations. While we know it would be desirable to assign the duties and responsibility to either bargaining unit people or non-bargaining unit people, it is not practical to do so at this time.

This is a function of a perpetual inventory control system. It is in the best interest of both parties to continue to share the responsibilities for physical inventory in the same spirit that we are mutually responsible for quality.

Mark J. Stuebe

General Manager

Wichita Clutch

Addendum F

401(k) SAVINGS PLAN FOR HOURLY/UNION EMPLOYEES

The Company established a Savings Plan for the bargaining unit employees of Warner Electric, Wichita Falls, Texas Plant. The Plan will be established and administered by the Company who will bear the fiduciary responsibility and the cost of its administration, arrange for a record keeper and trustee, produce and record all required reports filings and plan documentation, name a plan administrator, and arrange for audits as may be needed from time to time. It is understood and agreed that the Company through any communications that it may use to promote the plan, is not offering financial advice to any plan participant. A description of this plan is included herein, referred to as Addendum F.

OUTLINE OF SAVINGS PLAN PROVISIONS ELIGIBILITY AND ENROLLMENT: All bargaining unit employees will be eligible to enroll in the Savings Plan after the completion of their probationary period, or the effective date of this plan, which ever is later. Enrollments for employees already on the payroll will be effective as soon as practical following their execution of the appropriate enrollment and authorization forms provided by the Company. Each participant who enrolls will be provided an account in their name.

CONTRIBUTIONS: Each eligible participant will be entitled to have withheld from their pay up to fifty percent (50%) of their gross pay on a pre-tax basis (under section 401-K of the Internal Revenue Tax Code), and up to ten percent (10%) of gross pay on an after-tax basis. The Company will forward employee contributions to the record keeper/trustee, to be deposited in each employee’s account, as soon as possible following the end of each month. Enrollments and contributions will be cancelled or changed effective the first pay period following written authorization by the employee. Changes in contribution amounts will be allowed at any time. Re-enrollment after cancellation of contributions will be allowed at any time.

Effective August 9, 2004 the Company will match 50% of the first $750.00 pre tax dollars contributed by the employee to the plan.

Effective August 9, 2004 the Company will contribute $.10 per hour paid to the employee’s pre tax Savings Plan.

Effective August 8, 2005 the Company will match 50% of the first $1,000.00 of pre-tax dollars contributed by the employee to the plan.

Effective August 8, 2005 the Company will contribute $.20 per hour paid to the employee’s pre-tax Savings Plan.

INVESTMENT OPTIONS: The Company will arrange for a choice of investment options in accordance with section 404(c) of the Internal Revenue Code. These options will be a least 1) a fixed income option, 2) a long-term bond fund, 3) an aggressive growth fund, 4) a money market fund, and 5) an intermediate growth stock fund. Participants will be allowed to reallocate their account balances between investment options at any time, unless specifically prohibited by the plan provisions. Reallocation of account balances will be in even dollar amounts only.

WITHDRAWALS: Withdrawals of a participant’s account balance will be available upon retirement, termination of employment with the company, death of a participant, total and permanent disability of the participant, or hardship. Hardship withdrawals will be determined based upon facts and circumstances in accordance with Internal Revenue Code. Each participant shall designate a beneficiary upon enrollment.

LOANS: Each participant will be able to take a loan of no more than one half of their account balance. Loans will be made in one hundred dollar ($100) increments not less than five hundred dollars ($500.00), and not to exceed current Internal Revenue Code limits. Loans will be repaid in no less than sixty (60) months, except for the purchase of a principle residence which will have an amortization period of not less than one hundred and twenty months (120) months, and at an interest rate set at the origination of the loan. Interest rates will be one percent (1%) above the prime rate in effect on, and published in the Wall Street Journal on the first day of each calendar quarter. A participant will have no more than one outstanding loan at any time. Each Participant will pay to the record keeper, out of the proceeds of their loan, a loan origination fee not to exceed thirty-five ($35), and an annual loan maintenance fee not to exceed twenty dollars ($20). Any participant who fails to make a loan repayment in any three-month period, or who fails to pay back the entire loan balance within the loan amortization period, will be in default of the loan. Upon default of a loan the record keeper will issue a 1099 form in the amount of the remaining loan balance. A participant who defaults on a loan will be barred from any further loan eligibility.

INFORMATION AND STATEMENTS: Participants will be provided a statement of their accounts twice per year. The Company will undertake reasonable efforts to establish a phone access for all participants with the record keeper as soon as possible after the implementation of the plan. The phone system will offer at least a toll-free phone number (pending availability of toll free numbers) with the ability to inquire account balance and originate loans.

APPLICABLE STATE AND FEDERAL LAWS: In all cases of the taxable nature of compensation and plan provisions, applicable Federal, State and Local Laws will apply regardless of plan provisions to the contrary. The Company will arrange for all tests

required by the Internal Revenue Code and will be empowered to take any corrective action to participant’s accounts and or contributions that may be required within the scope of the applicable Code provisions.

Addendum G

8-9-04

Letter of Intent

2^nd Shift

This agreement has been made and entered into this 9^th day of August 2004, by and between the Wichita Clutch Company, and the IAM, Local Lodge 2771. It is the intent of this letter that only the amended articles listed below will be affected. Furthermore this letter will cover only second shift employees at Wichita Clutch Company.

NOW THEREFORE, IT IS AGREE AS FOLLOWS

Article 5

HOURS OF WORK AND OVERTIME

5.2 The normal workweek shall consist of four (4) consecutive workdays, Monday through Thursday. The normal workday shall consist of ten (10) consecutive hours excluding a one-half (1/2) hour unpaid lunch period.

5.3 For payroll purposes, the workweek shall be a seven (7) consecutive day period starting at 12:01 A.M. on Monday. For payroll purposes, the workday shall be the twenty-four - (24) hour period beginning at 2:01 A.M. each day. All employees covered by this agreement shall be paid weekly and the Company agrees not to withhold more than one (1) week’s pay.

5.4 The Company shall have the right from time to time to adjust the normal shift starting times by department between 2:30pm and 4:30pm. When all employees in a department are not affected by a change in shift hours, the Company will first solicit volunteers.

5.5 Scheduled starting and quitting times for employees accepting daily overtime assignments shall be at the discretion of the Company.

construed as part of the normal workweek except in the case of mandatory overtime.

5.7 It is agreed that in the event of change in the starting or ending time of a shift, the Company will notify the affected employees in such department during the preceding shift of such change. When the Company changes the scheduled report time for the beginning of a shift and the first day of the work week results in the starting time of the new week overlapping into the last day of the previous work week nothing in this article is to be construed to require the Company to pay overtime because of this overlap. Provided further however, if at the start of a new work day at 2:01 A.M. and an employee is already working, and at that time is being paid an overtime rate by reason that he had worked in excess of ten (10) hours or (twelve (12) hours during the work day immediately preceding, he shall continue to receive the appropriate overtime rate and not have pay reduced because of the advent of the new work day. For pay purposes a new workday will be established only after the employee leaves the premises. When a department or part of a department is scheduled to work on Saturday the employees involved will be notified, in all cases possible, before the end of the shift on Wednesday. Thereafter changes necessary will be made as soon as practical. Employees may refuse daily and Saturday overtime, provided however that in the event no qualified employee(s) accepts such overtime work, qualified employees in that job classification, department, and shift affected having the least overtime charged shall work the assigned overtime. As an option, qualified employees as determined by the Company in other classifications and on the same shift may be assigned the overtime assignment. Employees may refuse overtime on Holidays and on Sunday.

Employees failing to work accepted weekend overtime hours will be subject to Plant Rule # 43.

To provide opportunity for others to work in the place of employees who may not desire to do so, an employee when contacted about working overtime shall give a “Yes” or “No” answer within thirty (30) minutes. Employees will not be charged for any overtime hours refused if the hours were offered within the final one half hour of their shift.

5.8 Company Requested Overtime ( 1 ½) Overtime Premiums of time and one-half (1 ½) of the straight time hourly rate shall be paid as follows:

A. For all hours worked in excess of ten (10) hours in any one (1) workday

B. For all hours worked in excess of forty (40) hours in any one (1) workweek

C. For all hours worked by an employee on Saturday in any workweek.

If an employee is making up time missed because of holiday time, bereavement time, jury duty, personal time or any other employee requested time in a workday, the employee will not be paid overtime or double-time because the employee requested the company to accommodate the employees’ schedule. An employee cannot request to work more than twelve (12) hours in a single workday, to make up missed time.

5.9 Double-time Premium (2) Overtime premiums of two (2) times the straight time hourly rate shall be paid as follows:

A. For all hours worked by an employee on Sunday in any workweek.

B. For all hours worked in excess of twelve (12) hours in any one (1) workday.

C. For all hours worked on days defined as Holidays under this Agreement, except when such hours are part of a shift commencing on the one day and carrying over into the Holiday.

Article 9

VACATION

Vacation days taken by second shift employees will be taken in ten (10) hour increments. All eligibility and requirements will follow Article 9 of the current contract. Any employee that changes shifts during the vacation year will be allowed to use any remaining vacation hours with approval of his Supervisor.

Article 10

HOLIDAYS

Holiday hours taken by second shift employees will be taken in eight (8) hour increments. Any time missed in a workweek due to the employee taking a holiday will not be held against the employee for attendance purpose. It is the employee responsibility to request in advance, from the Area Managers, permission to come in early to make up any missed time. All missed time must be made up in the same workweek. The employee will make the request twenty-four hours in advance to ensure production needs do exist. No employees will be allowed to work past 2:00 A.M. unless requested by the Company.

10.1 Holidays Observed. During the term of this Agreement, the following days shall be considered Holidays:

Good Friday		Friday after Thanksgiving
Memorial Day		Christmas Eve
Fourth of July		Christmas Day
Labor Day		New Year’s Day
Thanksgiving		Paid Personal Time Off (PPTO) (2 Days)

PPTO hours taken by second shift employees can be taken in four (4) or eight (8) hour increments. Any time missed in a workweek due to the employee taking PPTO will not be held against the employee for attendance purpose. It is the employee responsibility to request in advance, from the Area Managers, permission to come in early to make up any missed time. All missed time must be made up in the same workweek. The employee will make the request twenty-four hours in advance to ensure production needs do exist. No employees will be allowed to work past 2:00 A.M., unless requested by the Company.

All eligibility requirements as stated in Paragraph 10.2, Holiday Pay and Eligibility, shall apply to both floater holidays.

Article 12

GROUP INSURANCE

Weekly Sickness and Accident (non-occupational) - $300.00 per week for 16 weeks (3 day waiting period for sickness unless hospitalized: first day payment for off-the-job accident) for all labor grades.

Second shift employees will have the weekly sickness and accident payment of $300.00 per week, paid out for the normal second shift workweek. If a second shift employee gets into an accident or sick on a non-normal workday (Friday through Sunday) no benefit will apply. For example, a second shift employee will be paid twenty-five percent (25%) of the $300.00 for each of the four (4) days he/she is out, Monday through Thursday.

Article 13

WAGES

Bereavement Pay

Bereavement hours taken by second shift employees will be taken in eight (8) hour increments. Any time missed in a workweek due to the employee taking bereavement will not be held against the employee for attendance purpose. It is the employee responsibility to request in advance, from the Area Managers, permission to come in early to make up any missed time. All missed time must be made up in the same workweek. The employee will make the request twenty-four hours in advance to ensure production needs do exist. No employees will be allowed to work past 2:00 A.M., unless requested by the Company.

Jury Pay

Jury duty hours taken by second shift employees will be taken in eight (8) hour increments. Any time missed in a workweek due to the employee taking jury duty will not be held against the employee for attendance purpose. It is the employee responsibility to request in advance, from the Area Managers, permission to come in early to make up any missed time. All missed time must be made up in the same workweek. The employee will make the request twenty-four hours in advance to ensure production needs do exist. No employees will be allowed to work past 2:00 A.M., unless requested by the Company.

TERM OF AGREEMENT

This Agreement for the 2^nd shift shall remain in full force and effect until midnight on August 10, 2007. The Company will commit to maintaining the present four (4), ten (10) hour shift schedule unless changed by mutual agreement. In the event, however, the Company chooses to implement a 3^rd shift the 2^nd shift hours will automatically revert to a five (5) day, eight (8) hour shift schedule.

Addendum H

8-9-04

Letter of Intent

Mr. Paul Black

I.A.M. Committee

Reference: Health / Fitness Dues Reimbursement

The company is committed to maintaining a healthy and safe work environment for its associates. In furtherance of this commitment, the company has maintained a practice of reimbursing its associates for up to $25.00 per month for membership fees in a gym or fitness club with proof of participation of 10 visits per month. The company intends to continue this practice for the benefit of all of its associates but may in the future choose to modify or eliminate this practice at its sole discretion.

Mark J. Stuebe

General Manager

Wichita Clutch

Addendum J

8-9-04

Letter of Intent

Mr. Paul Black

I.A.M. Committee

Reference: Combining Departments

During the 2001 contract negotiations the discussion of promoting more cellular manufacturing was discussed. Some of the topics from that discussion were combining Department 20 and Department 30 to form more machining cells and better utilization of our equipment. There were also discussions of forming a Journeyman classification for that area. Although no decisions were made during the discussion, both parties agreed to leave this open for discussions during the term of the contract.

Mark J. Stuebe

General Manager

Wichita Clutch

Plant Rules & Regulations

All work places and businesses must have certain rules and regulations to enable the company to meet its overall goals and objectives without disruptions. Rules are established to benefit the employee and the company. Most employees working in industry today realize that one employee’s misconduct may harm the rest and they expect certain standards of conduct to be established and maintained.

Disciplinary action must always be intended to train, correct, and strengthen employees in their jobs. Whether discipline is in the form of oral warnings, written warnings, suspension without pay, or discharge, these actions in so far as practical will be applied uniformly for the purpose of preventing recurrence of the cause of such action. They are not designed to humiliate or retaliate.

A complete list of violations requiring disciplinary action probably is not possible to establish nor should it be necessary, as “common sense” should prevail between reasonable people. However, in an effort to better communicate with employees and to provide Supervisors with guidelines to go by, therefore causing more uniform application, the following general work rules and regulations are listed with the appropriate disciplinary action to be applied if violated.

1. Stealing – Any act of theft of property belonging to the Company, another employee, or anyone doing business with the Company is strictly prohibited. (Discipline code 4)

2. Fighting – Provoking or instigating a fight or striking another person for any reason except in self-defense is absolutely prohibited. (Discipline code 4)

3. Intent to Harm/Destroy – Acts intended to destroy including defacing property or equipment of the company, another employee, or anyone doing business with the Company or acts intended to inflict bodily injury, whether or not destruction or injury actually occurs, and engaging in sabotage or espionage are absolutely prohibited. (Discipline code 4)

4. Encouraging Fellow Employees to Walk Off Job – Acts intended to coach, encourage, or in any way cause employees to walk off job whether or not employee engaging in such act leaves is strictly prohibited. (Discipline code 4)

5. Use or Possession of Alcoholic Beverage and /or Illegal Drugs – Use or possession of alcoholic beverages and/or Illegal Drugs on company property will not at any time be permitted. (Discipline code 4)

6. Conviction of Crime – An employee found guilty of a crime, other than for a minor traffic violation or similar violation in any court of law is subject to discharge. (Discipline code 4)

7. Punching Another Employee’s Time Card – Willful punching of another employee’s time card is prohibited. (Discipline code 4)

8. Immoral Conduct – Engaging in or committing an immoral act at any time will be basis for discharge. (Discipline code 4)

9. Any Falsification of Company Records – Any willful or intentional falsifying of company records is strictly prohibited. (Discipline code 4)

10. Borrowing Company Property – Borrowing Company materials and equipment without written permission, is absolutely prohibited. (Discipline code 4)

11. Insubordination – Refusing or failure to perform work assigned by a Supervisor is prohibited. If instruction of Group Leaders acting on orders of Supervisor is refused, the Group Leader should turn over the situation to the Supervisor to handle. Threats or intimidation of management or malicious statements concerning management shall be considered insubordination and are prohibited. (Discipline code 3)

12. Leaving Premises Without Permission – Employees that leave company property, except for lunch, during work hours without permission of their Supervisor are in violation of this work rule. (Discipline code 3)

13. Reporting to Work Under Influence of Alcohol or Drugs – Reporting to work under the influence of alcohol or drugs is prohibited. This includes reporting to work at beginning of shift, after lunch, or at anytime during your work hours. (Discipline code 3)

14. Sleeping – Sleeping during work hours is prohibited. (Discipline code 3)

15. Firearms, Explosives, Weapons – Possession of firearms, explosives, or weapons on company property are prohibited. Fireworks are considered explosives. (Discipline code 3)

16. Slowdown – Intentional holding back, slowing down, hindering, or limiting ones own production, or encouraging, coercing, or bribing others to do the same is prohibited. (Discipline code 3)

17. Untruthful Statements – Untruthful statements by employees to management, including their Supervisor, who are responsible for the administration of company rules and regulations and the work agreement are a violation. (Discipline code 3)

18. Disorderly Conduct/Horseplay – Disorderly conduct including but not limited to such things as so called practical jokes, horseplay, rowdiness, running, scuffling, throwing things, threatening, intimidating, coercing, interfering with other employees, shouting vulgarities, issuing false statements, etc., are prohibited. (Discipline code 2) Property damage as a result of violation of this rule must be paid for or the employee will be subject to discharge. (Discipline code 4)

19. Bulletin Boards/Notices – Altering or removing any matter, which has been posted by the company on bulletin boards or other locations, is prohibited. (Discipline code 2)

20. Notice Posting by Employees – Notices of any type posted by employees are prohibited unless authorized by a Supervisor. (Discipline code 2)

21. Solicitation – Employees may not solicit or sell anything unless authorized by a Supervisor. This includes taking up collections for any reason or distribution of literature. (Discipline code 2)

22. Perform Other Than Company Work – Performing work on company premises that is not authorized by the company is prohibited. (Discipline code 2)

23. Rest Breaks – The policy for breaks is one (1) ten (10) minute break in the first part of the shift and one (1) ten (10) minute break in the last part of the shift. Employees will be allowed an additional break of ten (10) minutes by their Supervisor if overtime is worked but not unless the overtime is for over one and one half (1 ½) hours in addition to the regular eight (8) hours. Taking unauthorized breaks as well as failure to begin work for any reason after break or lunch period is a violation. (Discipline code 2)

24. Visitors – Bringing visitors into the plant or asking them to come in and visit is prohibited unless approval is granted by your Supervisor. (Discipline code 2)

25. Borrowing Tools From Other Employees –Borrowing tools from other employees without their permission is prohibited. (Discipline code 2)

26. Vending Machine Damage – Abusing vending machines is prohibited. When malfunction occurs, report the problem to the proper person. (Discipline code 2) Property damage as a result of the violation must be paid for by the employee or the employee will be subject to discharge.

27. Permission to Discuss Grievance – The Company has the right to expect employees and the Union committeemen to obtain permission from the respective Supervisors before stopping work and pursuing a grievance. In order to minimize loss of production the Supervisor may schedule the time for the discussion to take place at a later time. In no case will the Supervisor delay approval and scheduling of a grievance meeting requested of them later than the day after receiving such a request. Union committee members shall confine their grievance activities to matters arising within their area of jurisdiction. Failure to obtain permission of an employee’s and committeeman’s respective Supervisor before discussion of a grievance on company time is considered a violation. (Discipline code 2)

28. Reading on Work Time – Reading literature not pertaining to business on the job during work hours is prohibited. (Discipline code 1)

29. Leaving Work Station Without Permission — Leaving the work station and/or department without permission from your Supervisor during work hours or failure to return within a reasonable time is a violation under this rule. Certainly permission is not necessary to go to the drinking fountain or restroom so long as the privilege is not abused. (Discipline Code 1)

30. Loafing, Loitering – Employees are expected to work steadily each hour for which they are paid. Loafing, loitering in the work areas or restrooms, or engaging in excessive visiting during working hours is prohibited. (Discipline code 1)

31. Safety – Employees are required to comply with all safety and health standards and all rules, regulations, and orders issued pursuant to Federal and State Safety and Health Laws and all rules, regulations, and requirements issued by the Company. (Discipline code 1)

32. Failure to Punch Own Time Card – Timekeeping is the law and failure to punch your card properly is considered a violation. (Discipline code 1)

33. Unsatisfactory Work Performance – Anyone whose work is unsatisfactory will be given a fair amount of time to bring their performance up to a satisfactory

level. Unsatisfactory performance by an employee cannot be allowed to continue. (Discipline code 1)

34. Willful Littering / Poor Housekeeping – Willful littering and poor housekeeping are a violation. (Discipline code 2)

35. Company Telephone Use – Use of a company telephone is prohibited, this includes the Pay Phone except during breaks and lunch, unless approved each time by a Supervisor. (Discipline code 1 )

36. Stopping Work Early Before Break, Lunch, End of Shift – Stopping early without approval of Supervisor is prohibited. (Discipline code 1)

37. Entering Plant – Entering the plant or workplace at unauthorized points or after your shift ends is prohibited unless permission is granted by a Supervisor. (Discipline code 1)

38. Absence Two (2) Consecutive Work Days – No Contact With Supervisor – Any employee who is absent for two (2) consecutive work days for any reason without notifying their Supervisor will be considered to have voluntarily quit. Employees will not be reinstated unless absence was for good and sufficient reason and the employee can show that he could not contact their Supervisor. (Discipline code 4)

39. Multiple Violations –Any combination of infractions with Code violations that total up to 9 (except when the last infraction was six (6) months or more since the previous infraction). (Discipline code 4)

Example:	2 Code 1’s = 2
	2 Code 2’s = 4
	1 Code 3 = 3
		9 = Code 4

40. Failure to Immediately Report an On-The-Job Injury to Supervisor – Failure to immediately report an on-the-job injury to your Supervisor will result in disciplinary action. (Immediately means at least the same day of injury.) (Discipline code 3)

41. Reporting to Work After Shift has Started–An employee that reports to work after the scheduled shift has began must notify their Supervisor before starting work. (Discipline code 1)

42. Tardiness – Reporting to work within the first thirty (30) minutes after the starting time of the shift as well as the first thirty (30) minutes after the end lunch is considered tardiness. An employee that accumulates five (5) or more violations in a thirty (30) day period will result in disciplinary action. Any one (1) violation after the initial five (5) will result in the next step of discipline. (Discipline code 1)

43. Absence – Failure to be present at work is of two (2) types of absence–Partial and Full.

Partial Absence is when a person makes themselves available for less then the last seven and one-half (7 ½) hours of a shift.

Full Absence is when a person does not avail themselves for work during a scheduled shift.

Both absences are serious problems, but partial absence has less impact on production requirements than full absences. Consequently, their impact is weighed accordingly. Each Partial Absence is a #1, and each Full Absence is a #2. Employee must contact their Supervisor each day to report an absence before the shift starts unless their Supervisor tells them otherwise.

Any combination of absences with a weighted value of five (5) within any sixty (6) day period will result in Code 2 discipline.

Only absences caused by medical disability and substantiated by written proof from a doctor will be excused. The first two consecutive work days absent for personal illness will be weighted as one absence; all following consecutive work days will be weighted as 1 days absence each. All other absences, regardless of reason, will be weighted for disciplinary purposes.

Discipline Code	1^stViolation	2^ndViolation	3^rdViolation	4^thViolation

1	Verbal	Written	Written	Discharge
	Warning	Warning	Warning
			3 day
			Suspension
			Without pay

2	Written	Written	Discharge
	Warning	Warning
		3 day
		Suspension
		Without pay

3	Written	Discharge
	Warning
	3 day
	Suspension
	Without pay

4	Discharge

EX-10.5 35 a2155511zex-10_5.htm EXHIBIT 10.5

Exhibit 10.5

TRANSITION SERVICES AGREEMENT

This TRANSITION SERVICES AGREEMENT (“Agreement”) is entered into as of this 30^th day of November 2004 by and among Warner Electric Holding, Inc., a Delaware corporation (“Seller”), Colfax Corporation, a Delaware corporation and parent of Seller (“Colfax,” and together with Seller, the “Service Providers”), and Altra Industrial Motion, Inc., a Delaware corporation (“Buyer”).

R E C I T A L S:

A. Pursuant to that certain LLC Purchase Agreement of even date herewith among Seller, Colfax and Buyer (the “Purchase Agreement”), Seller is selling to Buyer and Buyer is purchasing from Seller all of the limited liability company interests (the “LLC Interests”) of Power Transmission Holding LLC, a Delaware limited liability company (“PT”).

B. Pursuant to the Purchase Agreement, the Service Providers have agreed for a limited period of time to provide certain transitional supports services to Buyer in connection with the operation of the Business following the closing of the sale of the LLC Interests of PT to Buyer.

NOW, THEREFORE, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE 1

DEFINITIONS

Unless otherwise defined herein, for the purposes of this Agreement, capitalized terms shall have the meaning ascribed to them in the Purchase Agreement and the following terms shall have the definitions hereinafter specified:

1.1 “Actual Costs” means (a) with respect to any Services provided by non-exempt employees of the Service Providers, the hourly rate of compensation paid to the employee providing the Service multiplied by the number of hours such employee performed the Services for the Buyer Parties during the period, (b) with respect to any Services provided by exempt employees of the Service Providers, the product of (i) the monthly salary of the employee providing the Services, and (ii) a fraction, the numerator of which is one (1) and the denominator of which is one hundred sixty-six (166) and (iii) the number of hours the exempt employee performed the Services for the Buyer Parties during the period, and (c) with respect to any Services provided by a person other than an exempt or non-exempt employee of the Service Providers, the actual out-of-pocket costs

paid to such person by the Service Providers for the Services provided to the Buyer Parties during the period.

1.2 “Parties” shall mean Seller, Colfax and Buyer, collectively.

1.3 “Service” or “Services” shall mean those services described on Schedule A hereto, including any exhibit(s).

ARTICLE 2

SERVICES

2.1 Statement of Purpose. In connection with the transactions contemplated under the Purchase Agreement, Buyer is purchasing and intends to operate the Business as an ongoing enterprise, but requires the Service Providers to continue to provide certain services and personnel in support thereof as set forth in this Agreement. It is the intention of the Parties in entering into the Purchase Agreement and this Agreement to ensure a smooth transition from Seller to Buyer in the ownership and operation of the Business with the least disruption to the Business. It is the intention of the Parties that they will cooperate with each other in this regard and, where possible and mutually desirable to do so, to terminate the provision of Services hereunder at the earliest practicable date, and in no even later than the conclusion of the term for each Service set forth on Schedule A. The Parties recognize that certain Services performed by the Service Providers may actually be performed by Affiliates of such Persons and accordingly, for purposes of this Agreement, references to the Service Providers shall include their respective Affiliates.

2.2 Provision of Services. Subject to and upon the terms and conditions set forth in this Agreement, beginning on the Closing Date, the Service Providers shall, at the request of Buyer, provide or cause to be provided to Buyer the Services listed and described on Schedule A, for the term of Service set forth on Schedule A as to any particular Service. In every case, all of the aforesaid Services shall be provided in accordance with the terms, limitations and conditions set forth herein and on Schedule A. The fees to Buyer and the costs reimbursable by Buyer to the Service Providers for the Services shall be as specified on Schedule A.

2.3 Quality Level; Independent Contractor Status. Unless otherwise agreed by the Parties, the Services shall be provided at a quality level and in a manner that is substantially the same as the quality level and manner in which such Services were provided to the Business prior to the date of this Agreement, and Buyer shall use the Services at the same location(s) as the Business had used such Services prior to the Closing Date. The Service Providers shall act under this Agreement solely as independent contractors and not as agents of Buyer. Buyer agrees to use commercially reasonable efforts to transition use of the Services as soon as practically possible after the Closing Date. Buyer shall have no obligation to utilize any or all of the Services

provided by the Service Providers in accordance with this Agreement; provided, however, that, in the event Buyer elects not to use a particular Service, it shall promptly notify the Service Providers and the Service Providers shall have no further obligations hereunder with respect to such Service.

2.4 Use of Service Providers’ Employees/Provider Agreements. To the extent that the Service Providers use their own employees in connection with the provision of any Services hereunder, the Service Providers may, in their discretion, replace, add, reduce or otherwise change the number and identity of the employees providing such Services at any time. In the event that any third party agreement to which any Service Provider is a party is in conflict with the terms of this Agreement, the Service Providers shall promptly notify Buyer of the nature and extent of such conflict. Unless Buyer thereafter agrees to indemnify the Service Providers for any breach or default under the third party agreement attributable to the provision of services by the Service Providers under this Agreement, the Service Providers shall have no obligation to continue to provide such services under this Agreement.

2.5 Disclaimer of Warranty. EXCEPT AS OTHERWISE PROVIDED HEREIN, THE SERVICES AND GOODS PROVIDED HEREUNDER ARE PROVIDED AS IS, WHERE IS WITHOUT WARRANTY OF ANY KIND, INCLUDING WARRANTY OF MERCHANTIBILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.

2.6 Payment. Except as otherwise provided in Schedule A, invoices will be rendered each month by Colfax to Buyer for Services delivered by the Service Providers during the preceding month, and each such invoice shall be payable net thirty (30) days after the date thereof. Such invoices shall be substantiated by supporting information and shall itemize in reasonable detail the basis for such statement. Invoices not paid within such thirty (30) day period shall be subject to late charges for each month the statement is overdue, calculated as the greater of the following:

(i) in the event the Service Provider is subject to a late charge by virtue of its provision to Buyer of such service, such late charge; or

(ii) the then current prime rate as published in the “Money Rates” column of the Wall Street Journal plus one percentage point;

provided that in any event, the late charge shall be calculated to a rate no higher than that allowed by applicable law; and provided further, that no late charges shall apply to the portion of any invoice that is being contested in good faith by Buyer.

ARTICLE 3

TERM

3.1 General. The term of each Service is as set forth on Schedule A. Unless otherwise specified on Schedule A, Buyer may cancel any Service upon fifteen (15) days prior written notice, subject to the requirement that Buyer pay to the Service Providers the actual out-of-pocket costs associated with such cancellation.

3.2 Actions on Termination. Upon the termination of a Service or Services with respect to which the Service Providers hold books, records, files or any other documents owned by Buyer, the Service Providers will return all of such books, records, files and any other documents to Buyer as soon as reasonably practicable. Buyer shall bear the Service Provider’s reasonable costs and expenses associated with the return of such documents. In addition, upon the termination of any of the Services which involved the compilation of data on the Service Provider’s computer systems, the Service Providers shall, as soon as reasonably practicable, deliver to Buyer on magnetic media in readable format mutually acceptable to the Parties, which format shall be capable of being read by a computer mutually acceptable to the Parties, all data files maintained by the Service Providers to the extent that they contain information related to the Business, together with printed file descriptions sufficient to identify such data files and their contents and structure.

ARTICLE 4

FORCE MAJEURE/MAINTENANCE

4.1 Force Majeure. The Service Providers shall not be liable for any interruption of Service, delay or failure to perform under this Agreement when such interruption, delay or failure results from causes beyond their reasonable control (provided that the Service Providers have used their commercially reasonable efforts to avoid such interruption, delay or failure) or from any act or failure to act of Buyer, or as the result of strikes, lock-outs or other labor difficulties; acts of any government, riot, insurrection or other hostilities; embargo, fuel or energy shortage, fire, flood, acts of God, wrecks or transportation delays; or inability to obtain necessary labor, materials or utilities. In such event, the Service Providers’ obligations hereunder shall be postponed for such time as their performance is suspended or delayed on account thereof. The Service Providers will promptly notify Buyer, either orally or in writing, upon learning of the occurrence or pendency of such event of force majeure. The Service Providers shall have the right to establish priorities, in their sole reasonable discretion, as between the Service Providers and Buyer, as to the provision of the Services in the event of a force majeure.

4.2 Maintenance of Facilities. The Service Providers shall have the right to shut down temporarily the operation of any facilities providing any Service whenever in

their judgment such action is necessary for purposes of maintenance or installation of upgrades or new or additional services, facilities or software. The Service Providers shall give Buyer as much advance notice of any such shut down as is reasonably practicable. Where feasible, this notice shall be given in writing. Where written notice is not feasible, oral notice shall be given and promptly confirmed in writing. In the event such shut down is non-scheduled because it relates to an emergency, Buyer shall be notified that a shut down has occurred or will occur as soon as reasonable practicable. The Service Providers shall be relieved of their obligations to provide Services during the period that their facilities are so shut down but shall use reasonable efforts to minimize each period of shutdown for such purpose.

ARTICLE 5

LIABILITIES

5.1 Limitation of Liability. Buyer agrees that neither the Service Providers nor their respective officers, directors, stockholders, partners, members, managers, employees, Affiliates, agents or representatives (collectively, the “Seller Parties”) shall have any liability to Buyer or its officers, directors, stockholders, partners, members, managers, employees, Affiliates, agents or representatives (collectively, the “Buyer Parties”) with respect to this Agreement or anything done in connection herewith, including but not limited to the performance or breach hereof, or from the sale, delivery, provision or use of any Service or documentation or data provided under or covered by this Agreement, whether in contract, tort (including negligence or strict liability) or otherwise, except for any liability for losses, claims, damages, or expenses incurred by the Buyer Parties as a result of the willful misconduct or gross negligence of the Service Providers. NOTWITHSTANDING THE FOREGOING, THE SELLER PARTIES SHALL NOT BE LIABLE UNDER ANY CIRCUMSTANCES FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES WHATSOEVER OR ANY LOST PROFITS, WHICH IN ANY WAY MAY ARISE OUT OF OR RELATE TO THIS AGREEMENT OR THE PROVISION OF OR FAILURE TO PROVIDE ANY SERVICE HEREUNDER BY THE SERVICE PROVIDERS.

ARTICLE 6

TERMINATION

6.1 Breach of Agreement. If either of the Service Providers, on the one hand, or Buyer, on the other hand, is in breach of any of their respective obligations under this Agreement and such Party does not cure such default within thirty (30) days after receiving written notice thereof from the non-breaching Party, then the non-breaching Party (which in the case of an uncured breach by Buyer shall be Colfax, and in the case of an uncured breach by either of the Service Providers shall be Buyer) may terminate this Agreement, including the provision of Services pursuant hereto, immediately by providing written notice of termination. In the event this Agreement is terminated by Buyer pursuant to this Section 6.1, Colfax shall reimburse the Buyer Parties for Excess Costs incurred in obtaining any replacement Services during the period such Services are required to be provided by the Service Providers pursuant to Schedule A. “Excess Costs” shall mean actual out-of-pocket costs and expenses in excess of the costs and expenses for a particular Service as set forth on Schedule A; provided that such out-of-pocket costs and expenses are not in excess of customary charges for such services. In the event this Agreement is terminated by Colfax pursuant to this Section 6.1, Buyer shall reimburse Colfax for any costs it incurs as a result of ceasing the provision of Services hereunder prior to the dates set forth on Schedule A.

6.2 Sums Due. In the event of a termination of this Agreement, the Service Providers shall be entitled to all outstanding amounts due from Buyer up to and including the effective date of termination under Sections 2 and 3 hereof.

6.3 Effect of Termination. Termination or expiration of this Agreement shall not act as a waiver of any breach of this Agreement and shall not act as a release of any Party for any liability or obligation incurred under this Agreement through the effective date of such termination or expiration.

ARTICLE 7

MISCELLANEOUS

7.1 Notices. Any notice, request, instruction, consent or other document to be given hereunder by any Party hereto to another Party shall be given in the same manner and to the same Persons provided in Section 11.03 of the Purchase Agreement.

7.2 Waiver. Any of the terms or conditions of this Agreement may be waived in writing at any time by the Party which is entitled to the benefits thereof. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of such provision at any time in the future or a waiver of any other provision hereof.

7.3 Assignment. This Agreement may not be assigned by any Party without the prior written consent of the other Parties. Any purported assignment without such consent shall be void and of no effect; provided, however, that the Service Providers shall have the right to contract with a third party to provide any of the Services hereunder without the prior written consent of Buyer.

7.4 Enforceability. If any provision of this Agreement as applied to any Party or to any circumstance shall be adjudged by a court to be invalid or unenforceable, the same shall in no way affect any other provision of this Agreement, the application of such provision in any other circumstances, or the validity or enforceability of this Agreement. The Parties intend this Agreement to be enforced as written. If any such provision, or part thereof, however, is held to be unenforceable because of the duration thereof or the area covered thereby, the Parties agree that the court making such determination shall have the power to reduce the duration and/or area of such provision, and/or to delete the specific words or phrases, and in its amended form such provision shall then be enforceable and shall be enforced. If any provision of this Agreement shall otherwise finally be determined to be unlawful, then such provision shall be deemed to be severed from this Agreement and every other provision of this Agreement shall remain in full force and effect.

7.5 No Third-Party Beneficiaries or Right to Rely. Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement is intended to or shall create for or grant to any third party any rights.

7.6 Counterparts. This Agreement may be executed in more than one counterpart, each of which shall for all purposes be deemed to be an original and all of which shall constitute one and the same agreement. A signature to this Agreement delivered by telecopy or other commercially reasonable electronic means shall be deemed valid.

7.7 Governing Law. This Agreement shall in all respects be interpreted, construed and governed by and in accordance with the local laws of the State of Delaware, without regard to principles of conflict of laws.

7.8 Dispute Resolution. The Parties agree that any disagreement, dispute, controversy claim, including legal action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, shall be subject exclusively to the procedures set forth in Section 11.11 of the Purchase Agreement.

7.9 Entire Agreement; Amendment. This Agreement, the Purchase Agreement and all schedules and exhibits hereto and thereto constitute the sole understanding of the Parties with respect to the matters contemplated hereby and thereby and supersedes and renders null and void all other prior agreements and understandings between the Parties with respect to such matters. In the event of a conflict between the terms and conditions set forth in this Agreement and the terms and conditions of the Purchase Agreement, or the interpretation and application thereof, the terms and

conditions set forth in the Purchase Agreement shall prevail, govern and control in all aspects. No amendment, modification or alteration of the terms or provisions of this Agreement shall be binding unless the same shall be in writing and duly executed by the Party against whom such would apply.

IN WITNESS WHEREOF, each Party by its duly authorized officer has caused this Transition Services Agreement to be executed as of the date first above written.

	WARNER ELECTRIC HOLDING, INC.


	By:

	Name:

	Title:


	COLFAX CORPORATION


	By:

	Name:

	Title:


	ALTRA INDUSTRIAL MOTION, INC.


	By:

	Name:

	Title:

Schedule A

Transition Services Agreement

Service	Description	Term	Pricing

Transition Services

I. Colfax Services to CPTG
1. Human Resources Support
Health, Welfare and Fringe Benefits	Provide benefits administration (health insurance; long-term disability; flexible spending plan; workers compensation) during transition period. See also Memorandum of Understanding dated November 18, 2004 between Altra and Colfax concerning administration of the Flexible Spending Accounts.	3 months post close	Actual cost

Retirement plan	Provide benefits administration (all pension plans) including transition of plan assets as required by Section 5.04(d) of the LLC Purchase Agreement	3 months post close	Actual cost

Benefit Transition Services	Various Colfax personnel	3 months post close	$100 per hour per employee

2. Accounting, Tax and Finance Support
VP Finance duties	a) Closing support	3 months post close	Actual cost
	b) Consulting services	3 months post close

		From 3-6 months post-closing, these services will be provide only up to a maximum of 10 hours per month.	Actual cost

Tax Support	Bill Flexon to provide transition services including assistance to Wichita Falls (property & abatement).	6 months post close	Actual cost

Hyperion Administration	Doug Sulanke to train Mike Baker (appointed CPTG Hyperion administrator; South Beloit is established as Hyperion’s home location)	3 months post close	None or travel costs

Payroll Support-Boston Gear LLC	IMO Industries Inc., a wholly owned subsidiary of Colfax, will provide payroll services through December 31, 2004 on behalf of Boston Gear LLC and will (1) pay the required employment taxes on behalf of Boston Gear LLC, (2) file employment-related tax return and (3) provide forms W-2 to Boston Gear LLC associates. Buyer and Boston Gear LLC shall indemnify IMO Industries for any and all taxes, interest and penalties incurred in connection with IMO providing such services.	Until December 31, 2004	At actual cost

3. Asset Management Support
Treasury duties	Continue to maintain daily treasury functions	6 months post close	At actual cost

4. Information Technologies Support
Colfax website	Colfax to retain a link from the Colfaxcorp.com website to CPTG website	1 year post close	None

5. Intellectual Property Support
Colfax trade name	Provide a license to use Colfax trade name	1 year post close	None

Colfax Logo	Provide a license to use Colfax logo (“swoosh”)	1 year post close	None

6. Other
Shanghai Sourcing	Provide transition services	6 months	Actual Costs

Office	(project management and inspection)	post close

China Consulting	Consulting time from Dan Zisk to assist with China logistics	3 months post close	Actual Cost

Sourcing consulting	Consulting time from Mike Dwyer to assist with global sourcing	6 months post close	Actual Cost

CBS Materials	Provide copies of all CBS materials	Before close	None

CBS Training and transition	Mike Dwyer available on a contract basis to assist with transitioning corporate CBS activities to the PT group	6 months post close	Actual Cost

II. CPTG Services to Colfax
Roscoe and Bishop Auckland properties	Roscoe and Bishop Auckland Maintenance	TBD	TBD

III. Action Items
All historical documentation	Provide all CPTG related historical documentation, such as: all CPTG related audits, tax records, environmental records, legal records)	Immediately after post close	None

D-U-N-S number	Provide new D-U-N-S number with all historical data included	Before closing	None

Note: we need to discuss whether all of these things will be done pre-close. If so, they do not need to be included in this TSA.
BG and Ameridrives historical data transfer to Hyperion databases	Doug Sulanke to assist with the transfer of BG and Ameridrives historical data to Warner Hyperion database and run parallel system with Richmond.	Before closing	None

Bank authorization Signatures	Change bank authorization signatures post-close	Before Closing	None

Lines and letters of credit and bank guarantees	Assist with replacement of lines and letters of credit and bank guarantees	Before closing	None

Computer leases	Assist with transition of computer leases (provide carved out audited financial statements to start negotiations with new vendors)	Before closing	None

Phone leases	Assist with transition of phone leases (provide carved out audited financial statements to start negotiations with new vendors)	Before closing	None

Exchange and the Global address book	Transfer Exchange and the Global Address Book	Day one post close	None

EX-10.6 36 a2155511zex-10_6.htm EXHIBIT 10.6

Exhibit 10.6

TRADEMARKS AND TECHNOLOGY LICENSE AGREEMENT

This TRADEMARKS AND TECHNOLOGY LICENSE AGREEMENT (this “Agreement”) is entered into this 30th day of November, 2004 (“Effective Date”) by and among Colfax Corporation, a Delaware corporation (“Colfax”), Altra Holdings, Inc., a Delaware corporation (formerly known as CPT Acquisition Corp., a Delaware corporation) (“Altra Holdings”) and Altra Industrial Motion, Inc., a Delaware corporation (formerly known as Power Transmission Holding, LLC, a Delaware limited liability company) (“Altra Industrial Motion”).

RECITALS

A. Pursuant to that certain LLC Purchase Agreement of even date herewith among Colfax, Colfax’s subsidiary, Warner Electric Holding, Inc. (“Seller”) and Altra Holdings (the “Purchase Agreement”), Seller is selling to Altra Holdings and Altra Holdings is purchasing from Seller all of the limited liability company interests (the “LLC Interests”) of Power Transmission Holding, LLC, a Delaware limited liability company (“PT”).

B. Pursuant to that certain Transition Services Agreement of even date herewith among Seller, Colfax and Altra Holdings, Colfax and Seller have agreed for a limited period of time to provide certain transitional support services to Altra Holdings in connection with the operation of the Business (as defined in the Purchase Agreement) following the closing of the sale of the LLC Interests of PT to Altra Holdings (“Closing”).

C. For a defined transition period, Altra Industrial Motion and all direct and indirect subsidiaries of Altra Industrial Motion existing as of the Effective Date (such subsidiaries and Altra Industrial Motion, collectively the “Licensed Companies”) desire to continue to use the “Swoosh” Marks, as set forth on the attached Schedule 1, and the marks COLFAX and IMO (collectively the “Marks”), which Marks, at Closing, were in use by the Licensed Companies in connection with the operation of the Business alone, in combination with each other and as part of composite marks, elements of which are now owned by the Licensed Companies.

D. Colfax desires to grant the Licensed Companies, and the Licensed Companies desire to receive, the right to continue using the Marks during such transition period in connection with the operation of the Business, upon the terms and conditions set forth herein.

E. On a perpetual and irrevocable basis, the Licensed Companies desire to continue to use, and desire for their respective future subsidiaries to use, certain business methods of Colfax generally known as of the Effective Date as the Colfax Business System and further described in the attached Schedule 2 (the “CBS”), which, at Closing, was in use by the Licensed Companies in connection with the operation of the Business.

F. Colfax desires to grant the Licensed Companies and their respective future subsidiaries, and the Licensed Companies desire to receive, the perpetual and irrevocable right to continue using the CBS in connection with the operation of the Business and the right to use the CBS in connection with any other business in which any of the Licensed Companies and/or their respective future subsidiaries may become engaged, upon the terms and conditions set forth herein.

NOW, THEREFORE, the parties, intending to be legally bound, hereby agree as follows:

2. Grant Of License in CBS. Colfax grants to the Licensed Companies and their respective future subsidiaries a perpetual, irrevocable, royalty-free, fully paid-up, nonexclusive, transferable, sublicenseable, worldwide license to (a) use the CBS in connection with the respective businesses of the Licensed Companies and the businesses of their respective future subsidiaries and (b) modify and create derivative works of the CBS for use in connection with the respective businesses of the Licensed Companies and the businesses of their respective future subsidiaries (the “CBS License”).

3. Ownership.

(a) Marks and CBS. Altra Holdings and Altra Industrial Motion (i) acknowledge that Colfax and certain of its remaining subsidiaries and affiliates shall remain the sole owner(s) of the Marks and, subject to Section 3.(b) below, the CBS and (ii) agree that Altra Holdings, the Licensed Companies and, with respect to the CBS License, the respective future subsidiaries of the Licensed Companies will do nothing inconsistent with such ownership. Altra Holdings and Altra Industrial Motion further acknowledge that all use of the Marks by the Licensed Companies shall inure to the benefit of and be on behalf of the owner of the Mark. Altra Holdings and Altra Industrial Motion agree that nothing in this Agreement shall give Altra Holdings, any of the Licensed Companies or any of the respective future subsidiaries of the Licensed Companies any right, title or interest in the Marks or the CBS, other than the Marks License and the CBS License and except as set forth in Section 3.(b) below. Altra Holdings and Altra Industrial Motion agree that they will not attack the title of Colfax and certain of its remaining subsidiaries and affiliates to the Marks and the CBS or attack the validity of the Marks License, the CBS License or this Agreement. COLFAX MAKES NO WARRANTIES OR REPRESENTATIONS REGARDING OWNERSHIP AND NON-INFRINGEMENT OF THE MARKS AND THE CBS.

(b) Modifications and Derivative Works of the CBS. Colfax, Altra Holdings and Altra Industrial Motion agree that, subject to Colfax’s and certain of its remaining subsidiaries’ and affiliates’ ownership in and to the CBS as set forth in Section 3.(a) above, the Licensed Companies or its subsidiaries, as the case may be, shall own all rights, title and interest in and to any modifications or derivative works of the CBS made by or for any of the Licensed Companies or any of it subsidiaries.

4. Quality Standards for Use of the Marks. Altra Holdings and Altra Industrial Motion agree that the quality of all services rendered and all products sold by the Licensed Companies under the Marks shall be consistent with the quality and quality control standards established by Colfax with respect to services rendered and products sold by the Licensed Companies and PT under the Marks as of Closing. The parties agree that the level of quality of goods and services provided by Colfax, the Licensed Companies and PT under the Marks as of Closing meet Colfax’s quality control standards. Altra Holdings and Altra Industrial Motion agree, at Colfax’s expense, to reasonably cooperate with Colfax in facilitating Colfax’s reasonable control of such quality of goods and services provided by the Licensed Companies under the Marks and to supply Colfax with specimens of all uses of the Marks upon Colfax’s written request.

5. Manner of Use of Mark. Altra Holdings and Altra Industrial Motion agree to use the Marks only in the form and manner and with appropriate legends as prescribed by Colfax in writing, and not to use any other trademarks or service marks in combination with the Marks so as to create a composite mark without prior written approval of Colfax. Altra Holdings and Altra Industrial Motion shall use the Marks followed by the TM or SM symbols where appropriate and practical.

6. Infringement Proceedings. Altra Holdings and Altra Industrial Motion agree to notify Colfax of any unauthorized use of the Marks by others promptly as it comes to Altra Holdings’ and Altra Industrial Motion’s attention. Colfax shall have the sole right and discretion to bring infringement or unfair competition proceedings involving the Marks after conferring with Altra Holdings and Altra Industrial Motion. Altra Holdings and Altra Industrial Motion shall reasonably cooperate with Colfax in any such proceedings at Colfax’s expense.

7. Term and Termination. The Mark License shall continue in effect for one (1) year from Closing unless earlier terminated by either party pursuant to this Section 7. The CBS License shall continue in effect in perpetuity and may not be terminated for any reason whatsoever. The Licensed Companies may cease to use the Marks and/or the CBS and/or terminate the Marks License and/or the CBS License at any time with or without cause. Colfax shall have the right to terminate only the Marks License upon thirty (30) days prior written notice to Altra Holdings and Altra Industrial Motion (a) in the event Altra Holdings and Altra Industrial Motion seek protection under any bankruptcy, receivership, trust deed, creditors arrangement, composition or comparable proceeding, or (b) upon the appointment of any receiver or trustees to take possession of the properties of Altra Holdings and Altra Industrial Motion or upon the winding up of Altra Holdings and Altra Industrial Motion (other than in connection with the acquisition of all or substantially all of Altra Holdings’ and/or Altra Industrial Motion’s assets, stock or business to which this Agreement relates (whether by sale, acquisition, merger, operation of law or otherwise)) or (c) upon material breach of any of the material provisions of this Agreement by Altra Holdings or Altra Industrial Motion which breach is not cured within thirty (30) days after Altra Holdings and Altra Industrial Motion receive written notice from Colfax describing such breach.

8. Effect Of Termination. Upon termination or expiration of the Marks License, the Acquired Parties agree (a) to immediately discontinue all use of the Marks and any term

confusingly similar thereto, (b) to destroy all printed material bearing any of the Marks, and (c) that all rights in the Marks and the goodwill connected therewith shall remain the property of Colfax or its affiliates. Sections 2, 3, 8, 9, 10, 11, 12 and 13 and the second sentence in Section 7 shall survive termination or expiration of this Agreement.

9. Limitation of Liability. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE, NO PARTY WILL BE LIABLE TO ANY OTHER PARTY OR ANY OTHER PERSON OR ENTITY WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY (A) INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES OR (B) LOST PROFITS OR LOST BUSINESS, EVEN IF THE REMEDIES PROVIDED FOR IN THIS AGREEMENT FAIL OF THEIR ESSENTIAL PURPOSE AND EVEN IF ANY PARTY HAS BEEN ADVISED OF THE POSSIBILITY OR PROBABILITY OF SUCH DAMAGES.

10. Assignment; Successors and Permitted Assigns. This Agreement may not be assigned by any party without the prior written consent of the other parties, except that a party may, without the consent of any of the other parties, assign or transfer this Agreement and its rights and obligations hereunder to a successor of all or substantially all of such party’s assets, stock or business to which this Agreement relates (whether by sale, acquisition, merger, operation of law or otherwise). Any purported assignment in violation of this Section 10 shall be void and of no effect. This Agreement shall be binding on, inure to the benefit of, and be enforceable by the parties and their respective heirs, successors and valid assigns.

11. Dispute Resolution. The parties agree that any disagreement, dispute, controversy, claim, including, without limitation, legal action, suit or proceeding arising out of or relating to this Agreement, shall be subject exclusively to the procedures set forth in Section 11.11 of the Purchase Agreement.

12. Notices. Any notice or other communication required or permitted to be made or given to a party under this Agreement shall be deemed sufficiently made or given on the date of delivery if delivered in person or by overnight commercial courier service with tracking capabilities with costs prepaid, or five (5) days after the date of mailing if sent by certified first class U.S. mail, return receipt requested and postage prepaid, to the address of the parties set forth below or such other address as may be given from time to time under the terms of this notice provision.

If to Colfax:		If to Altra Holdings:

Colfax Corporation		Altra Holdings, Inc.
993 Lenox Drive		14 Hayward Street
Suite 200		Quincy, MA 02171
Laurenceville, NJ 08648

Attention: Thomas M. O’Brien		Attention: Michael L. Hurt

If to Altra Industrial Motion:

Altra Industrial Motion, Inc.
14 Hayward Street
Quincy, MA 02171

Attention: Michael L. Hurt

13. Miscellaneous. This Agreement, the Transition Services Agreement, the Purchase Agreement and all schedules and exhibits hereto and thereto constitute the sole understanding of the parties with respect to the matters contemplated hereby and thereby and supersedes and renders null and void all other prior agreements and understandings between the parties with respect to such matters. In the event of a conflict between the terms and conditions set forth in this Agreement and the terms and conditions of the Purchase Agreement, or the interpretation and application thereof, the terms and conditions set forth in the Purchase Agreement shall prevail, govern and control in all aspects. No amendment, modification or alteration of the terms or provisions of this Agreement shall be binding unless the same shall be in writing and duly executed by all parties hereto. If any provision of this Agreement is held to be illegal or unenforceable, that provision shall be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect and enforceable. Headings and captions are for convenience only and are not to be used in the interpretation of this Agreement. This Agreement shall in all respects be interpreted, construed and governed by and in accordance with the local laws of the State of Delaware, without regard to principles of conflict of laws. This Agreement may be executed in more than one counterpart, each of which shall for all purposes be deemed to be an original and all of which shall constitute one and the same agreement. A signature to this Agreement delivered by telecopy or other commercially reasonable electronic means shall be deemed valid.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized representatives as of the day and year above written.

COLFAX CORPORATION					ALTRA HOLDINGS, INC.


By:					By:

Name					Name:

Title:					Title:


ALTRA INDUSTRIAL MOTION, INC.

By:

Name

Title:

SCHEDULE 1

Swoosh Mark

(shown as composite mark with BOSTON GEAR)

SCHEDULE 2

Colfax Business System

Comprehensive business management system related to manufacturing quality, delivery and cost, with roots in the Toyota production system, adapted to the U.S. manufacturing environment by Danaher Corporation, adapted and approved by Colfax Companies, as further described at www.colfaxcorp.com/glossary/html

EX-10.7 37 a2155511zex-10_7.htm EXHIBIT 10.7

Exhibit 10.7

L E A S E

THIS LEASE is dated as of February 13,2004 between the Landlord and the Tenant named below, and is of space in the Building described below.

ARTICLE 1

BASIC DATA; DEFINITIONS

1.1 Basic Data. Each reference in this Lease to any of the following terms shall be construed to incorporate the data for that term set forth in this Section:

Landlord: Quincy Hayward Street, LLC, a Massachusetts limited liability company

Landlord’s Address: 2181 Washington Street, Suite 101, Boston, Massachusetts 02119.

Tenant: Imo Industries, Inc., a Delaware corporation

Tenant’s Address: 14 Hayward Street, Quincy, Massachusetts 02171.

Building: That certain building commonly known and numbered as 14 Hayward Street, Quincy, Massachusetts.

Property: The land located in Quincy, Massachusetts, together with the Building and other improvements thereon, all as more particularly described on Exhibit A attached hereto.

Premises: The entire second (2nd) floor of the Building, as shown on the location plan Exhibit B attached hereto.

Basic Rent: $150,000 annually, payable in equal monthly installments of $12,50.00.

Security Deposit: $12,500.00, which shall be paid out of the Closing (as defined herein).

Commencement Date: The date of the Closing.

Term: One year from the Commencement Date.

Extension Option: Tenant and Landlord shall have the right to extend the Term of this Lease upon mutually acceptable terms and conditions Either party shall have the right to terminate any such Extension Option upon six (6) months’ written notice to the other.

Tenant’s Pro Rata Share: Seventy-Five Percent (75%).

Insurance: Landlord shall maintain casualty insurance for the full replacement value of the Building. Tenant shall pay Landlord its Pro Rata Share of the insurance costs applicable to the Term.

Permitted Use: Tenant shall use the Premises for office and related uses.

Parking: Tenant shall have the right to use sixty-five (65) designated parking spaces at the Property, as more particularly shown an the Parking Plan attached hereto as Exhibit C.

1.2 Definitions. When used in this Lease, the capitalized terms set forth below shall have the meanings set forth below.

Additional Rent All charges and sums payable by Tenant as set forth in this Lease, other than and in addition to Basic Rent.

Closing: The date on which Tenant, as Seller, and Landlord, as Buyer, consummate the purchase and sale transaction of the Property, pursuant to that certain Purchase and Sale Agreement, dated January 9, 2004.

Environmental Laws: Any federal, state and/or local statute, ordinance, bylaw, code, rule and/or regulation now or hereafter enacted, pertaining to any aspect of the environment or human health, including, without limitation, Chapter 21C, Chapter 2 1D, and Chapter 21 E of the General Laws of Massachusetts and the regulations promulgated by the Massachusetts Department of Environmental Protection, the Comprehensive Environmental Response, Compensation and Liability Act of 1980,42 U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act of 1976,42 U.S.C. Section 6901 et seq., the Toxic Substances Control Act, IS U.S.C. Section 2061 et seq., the Federal Clean Water Act, 33 U.S.C. Section 1251, and the Federal Clean Air Act, 42 U.S.C. Section 7401 et seq.

First Floor Premises: Shall mean that portion of the Building located on the first (1st) floor which Landlord may rent out to a tenant during the Term of this Lease or any extension hereof.

Hazardous Materials: Shall mean each and every element, compound, chemical mixture, contaminant, pollutant, material, waste or other substance which is defined, determined or identified as hazardous or toxic under any Environmental Law, including, without limitation, any “oil,” “hazardous material,” “hazardous waste,” “hazardous substance” or “chemical substance or mixture”, as the foregoing terms (in quotations) are defined in any Environmental Laws.

Operating Expenses: Shall mean any costs and expenses assessed to Landlord for the following services and utilities related to Building and the Property: (i) building maintenance; (ii) general pest control; (iii) trash compactor; (iv) elevator maintenance; (v) snow plowing; (vi) electricity; (vii) gas; and (viii) water and sewer.

1.3 Enumeration of Exhibits. The following Exhibits are a part of this Lease, are incorporated herein by reference attached hereto, and are to be treated as apart of this Lease for all purposes. Undertakings contained in such Exhibits are agreements on the

part of Landlord and Tenant, as the case may be, to perform the obligations stated therein.

Exhibit A — Description of Property

Exhibit B — Location Plan of the Premises

Exhibit C — Parking Plan

ARTICLE 2

PREMISES AND APPURTENANT RIGHTS

2.1 Lease of Premises. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises for the Term and upon the terms and conditions hereinafter set forth Tenant shall have, as appurtenant to the Premises, the non-exclusive right to use, and permit its invitees to use in common with others entitled thereto, the easements, rights of way or other rights, if any, which are appurtenant to the Premises pursuant to any recorded documents evidencing such easements or rights, as well as the right to use all entrances, common areas of the Building and the Property, the outdoor trash compactor, the truck dock, and roof-top antennas and satellite dish, which are all located on or adjacent to the Building.

ARTICLE 3

RENT

3.1 Basic Rent. Tenant agrees to pay the Basic Rent to Landlord commencing on the Commencement Date, without offset, abatement (except as provided in Articles 11 and 12), deduction or demand. Basic Rent for any partial month shall be pro-rated on a daily basis, and if the first day on which Tenant must pay Basic Rent shaft be other than the first day of a calendar month, the first payment which Tenant shall make to Landlord shall be equal to a proportionate part of the monthly installment of Basic Rent for the partial month from the first day on which Tenant must pay Basic Rent to the last day of the month in which such day occurs, plus the installment of Basic Rent for the succeeding calendar month.

3.2 Additional Rent. Commencing on the Commencement Date, Tenant shall pay monthly the following amounts to Landlord as “Additional Rent”:

(a) Operating Expenses. Tenant’s Pro Rata Share

(b) Real Estate Taxes. Tenant’s Pro Rata Share

(c) HVAC Operating Expenses. Tenant shall pay one hundred percent (100%) of the operational and maintenance costs associated with the HVAC system that services the Premises.

3.3 Security Deposit. The Security Deposit shall be as set forth in Section 1.1. hereof. The Security Deposit shall be applied to the last month’s rent, if not previously applied by Landlord to correct a Default of Tenant (as defined herein).

ARTICLE 4

COMMENCEMENT AND CONDITION

4.1 Commencement Date: The “Commencement Date” shall be as set forth in Section 1.1 hereof.

ARTICLE 5

USE OF PREMISES

5.1 Permitted Use.

(a). Tenant agrees that the Premises shall be used and occupied by Tenant for the Permitted Use.

5.2 Hazardous Materials.

(a) Tenant may use chemicals of the kind and in amounts and in the manner customarily used to conduct its business at the Premises and to maintain and operate the business machines located in the Premises. Tenant shall not release or dispose of any other Hazardous Materials on or about the Premises.

(b) Tenant shall indemnify,, defend and hold Landlord harmless from and against, any liabilities, losses claims, damages, interest, penalties, fines, attorneys’ fees, experts’ fees, court costs, remediation costs, and other expenses which result from the use, storage, handling, treatment, transportation, release, threat of release or disposal of Hazardous Materials in or about the Premises by Tenant or Tenant’s agents, employees, contractors or invitees during the Term. The provisions of this paragraph (b) shall survive the expiration or earlier termination of this Lease.

(c) Landlord shall indemnify, defend and hold Tenant harmless from and against any liabilities, losses claims, damages, interest, penalties, fines, attorneys’ fees, experts’ fees, court costs, remediation costs, which result from the use, storage, handling, treatment, transportation, release, threat of release or disposal of Hazardous Materials in or about the Property and the Premises, or the violation of any Environmental Laws occurring after the Commencement Date if not caused by Tenant. The provisions of this paragraph (c) shaft survive the expiration or earlier termination of this Lease.

ARTICLE 6

ALTERATIONS

6.1 Installations and Alterations by Tenant. Tenant shall make no alterations, additions or improvements in or to the Premises without Landlord’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed.

ARTICLE 7

ASSIGNMENT AND SUBLETTING

7.1 Consent Tenant shall not assign this Lease or sublet the Premises, in whole or in part, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed.

ARTICLE 8

VACATING PREMISES

8.1 Tenant’s Vacating the Premises. Tenant may vacate all or a portion of the Premises at any time during the Term of this Lease.

(a) In the event that Tenant elects to vacate all of the Premises, Tenant shall continue to be responsible for all Basic Rent due under this Lease for the entire Term, provided, however, that Tenant shall not be responsible for any Additional Rent due hereunder after Tenant notifies Landlord in writing that it has vacated the Premises.

(b) In the event that Tenant elects to vacate a portion of the Premises, Tenant shall continue to be responsible for all Basic Rent due under this Lease and shall be responsible for the payment of Additional Rent as the same shall be fairly adjusted to reflect the vacation.

ARTICLE 9

RESPONSIBILITY FOR REPAIRS AND SURRENDER

9.1 Landlord Repairs. Landlord agrees to keep in good order, condition and repair the roof and structural components of the Building and all plumbing, mechanical and electrical systems in the Building, except that Landlord shaft in no event be responsible to Tenant for any condition caused by the negligence or misconduct of Tenant.

9.2 Tenant Repairs. Tenant agrees to maintain and repair (without the obligation, to replace) the internal portion of the Premises, including, without limitation, the HVAC system serving the Premises, regardless of whether such system is within the internal portion of the Premises, which Tenant shall keep and maintain in its condition as of the Commencement Date, ordinary wear and tear excepted.

9.3 Surrender of Premises. Upon the expiration or earlier termination of the Term of this Lease, Tenant shall peaceably quit and surrender to Landlord the Premises in neat and clean condition and in good order, condition and repair, ordinary wear and tear and damage by fire or other casualty excepted, provided, however, that in no event shall Tenant be responsible for surrendering the Premises in a condition better than that which exists at the Commencement Date, ordinary wear and tear excepted. Tenant shall remove all of its personal property and furnishings from the Premises and shall repair any material damage caused by such removal.

ARTICLE 10

INDEMNITY AND PUBLIC LIABILITY INSURANCE

10.1 Tenant’s Indemnity. Except to the extent arising from the gross negligence or. willful misconduct of Landlord or its agents, invitees, or employees, Tenant agrees to indemnify and save harmless Landlord and Landlord’s partners, members, shareholders, officers, directors, managers, employees, agents and contractors from and against all claims, losses, cost, damages, liability or expenses of whatever nature arising from any accident, injury or damage whatsoever to any person, or to the property of any person, occurring in or about the Premises; or the use or occupancy of the Premises or of any business conducted therein or any thing or work whatsoever done or any condition created (other than by Landlord or Landlord’s agents or invitees ) in or about the Premises, and, in any case, occurring after the Commencement Date until the expiration of the Term of this Lease and thereafter so long as Tenant is in occupancy of any part of the Premises. The provisions of this Section 10.1 shall survive the expiration or earlier termination of this Lease.

10.2 Landlord’s Indemnity. Except to the extent arising from the gross negligence or willful misconduct of Tenant or its agents or employees, Landlord agrees to indemnify and save harmless Tenant and Tenant’s partners, members, shareholders, officers, directors, managers, employees, agents and contractors from and against all claims, losses, cost, damages, liability or expenses of whatever nature arising from any accident, injury or damage whatsoever to any person, or to the property of any person, occurring in or about the Property; or the use or occupancy of the Property or of any business conducted therein or any thing or work whatsoever done or any condition created (other than by Tenant) in or about the Property, and, in any case, occurring after the Commencement Date until the expiration of the Term of this Lease and thereafter so long as Tenant is in occupancy of any part of the Premises. The provisions of this Section 10.2 shall survive the expiration or earlier termination of this Lease.

10.3 Landlord’s Insurance. Landlord agrees to maintain in full force and effect, dining the Term of this Lease, casualty insurance as set forth in Section 1.1.

10.4 Waiver of Subrogation. The parties hereto shall each procure an appropriate clause in, or endorsement on, any property insurance policy on the Premises or any personal property, fixtures or equipment located thereon or therein, pursuant to which the insurer waives subrogation or consents to a waiver of right of recovery in favor of either party, its respective agents or employees. Having obtained such clauses and/or endorsements, each party hereby agrees that it will not make any claim against or seek to recover from the other or its agents or employees for any loss or damage to its property or the property of others resulting from fire or other perils covered by such property insurance regardless of the cause or origin of such loss or damage, including, but not limited to, the negligence of such other party or its agents or employees.

ARTICLE 11

FIRE. CASUALTY

11.1 Right of Termination. If the Building is damaged by fire or casualty, and such damage materially interferes with Tenant’s use of the Premises, as determined by Tenant in its reasonable discretion, Tenant shall have the right to terminate this Lease, unless Landlord repairs

such damage within thirty (30) days of Tenant’s notice thereof. In the event that Landlord does not so repair the damage, Tenant shall have the right to terminate this Lease by giving notice of its election to do so to Landlord, whereupon this Lease shall terminate as of the date of such notice with the same force and effect as if such date were the date originally established as the expiration date hereof. If this Lease is terminated pursuant to this Section 11.1, Tenant shall be entitled to a refund or abatement of any Basic Rent and/or Additional Rent that Tenant may have paid to Landlord for any period beyond the date of such termination.

11.2 Abatement of Rent. In the event that Tenant does not elect to terminate this Lease pursuant to Section 11.1 above, then Basic Rent and Additional Rent payable by Tenant shall abate proportionately for the period during which, by reason of such damage, there is material interference with Tenant’s use of the Premises.

ARTICLE 12

EMINENT DOMAIN

12.1 Right of Termination. If any part of the Building is taken by any exercise of the right of eminent domain, and such taking materially interferes with Tenant’s use of or access to the Premises as determined by Tenant in its sole discretion, Tenant shall have the right to terminate this Lease by giving notice of its election to do so to Landlord, whereupon this Lease shall terminate as of the date of such n notice with the same force and effect as if such date were the date originally established as the expiration date hereof. If this Lease is terminated pursuant to this Section 12.1, Tenant shall be entitled to a refund or abatement of any Basic Rent and/or Additional Rent that Tenant may have paid to Landlord for any period beyond the date of such termination.

12.2 Abatement of Rent. If the Premises shall be affected by any exercise of the power of eminent domain, Basic Rent and Additional Rent payable by Tenant shall be justly and equitably abated and reduced according to the nature and extent of the loss of use thereof suffered by Tenant.

12.3 Condemnation Award. Landlord shall have and hereby reserves and excepts, and Tenant hereby grants and assigns to Landlord, all rights to recover for damages to the Premises and the leasehold interest hereby created, and to compensation accrued or hereafter to accrue by reason of any taking, by exercise of the right of eminent domain, and by way of confirming the foregoing. Tenant hereby grants and assigns, and covenants with Landlord to grant and assign to Landlord, all rights to such damages or compensation. Notwithstanding the foregoing, Tenant shall retain the right to any portion of such damages or compensation relating to any Tenant improvements, equipment and furniture, as well as Tenant’s moving expenses.

ARTICLE 13

RIGHTS OF MORTGAGEES: TRANSFER OF TITLE

13.1 Lease to be Subordinate. Subject to the provisions of this Section 13.1, this Lease shall be subordinate to any mortgage, deed of trust or ground lease or similar encumbrance (collectively, a “Mortgage”, and the holder thereof from time to time the “Holder”) from time to time encumbering the Premises, whether executed and delivered prior to or subsequent to the date of this Lease, unless the Holder shall elect otherwise. If this Lease is subordinate to any

Mortgage and the Holder or any other party shall succeed to the interest of Landlord pursuant to the Mortgage (such Holder or other party, a “Successor”), at the election of the Successor, Tenant shall attorn to the Successor and this Lease shall continue in full force and effect between the Successor and Tenant. Tenant agrees to execute such instruments of subordination or attornment in confirmation of the foregoing agreement as the Holder or Successor reasonably may request.

13.2 Non-Disturbance Agreement. Notwithstanding the foregoing, Tenant shall not be required to subordinate this Lease to a Mortgage or attorn to any Holder or Successor, nor shall the subordination provided herein be self-operative unless the Holder shall enter into an agreement with Tenant to the effect that in the event that the Holder or any other party shall succeed to the interest of Landlord hereunder pursuant to such Mortgage, Tenant’s right to possession of the Premises shall not be disturbed and Tenant’s other rights hereunder shall not be adversely affected by any foreclosure of such Mortgage provided that Tenant is not then in default hereunder. Such agreement shall be in a written instrument in. form satisfactory to Tenant in its reasonable discretion. Landlord shall use commercially reasonable efforts to provide to Tenant such agreement from any present or future Holder.

ARTICLE 14

DEFAULT; REMEDIES

14.1 Tenant’s Default. The following events shall constitute a “Default of Tenant”

(a) Tenant shall fail to pay the Basic Rent or Additional Rent hereunder when due and such failure shall continue for ten (10) days after written notice to Tenant from Landlord; or

(b) Tenant shall neglect or fail to perform or observe any other covenant herein contained on Tenant’s part to be performed or observed and Tenant shall fail to remedy the same within thirty (30) days after notice to Tenant specifying such neglect or failure, or if such failure is of such a nature that Tenant cannot reasonably remedy the same within such thirty (30) day period, Tenant shall fail to commence promptly (and in any event within such thirty (30) day period) to remedy the same and to prosecute such remedy to completion with diligence and continuity; admit in writing its inability to pay its debts generally as they become due; or

14.2 Landlord’s Remedies. If a Default of Tenant exists, in addition to any other remedies available to Landlord at law or in equity, Landlord shall have the following rights and remedies:

(a) Upon the occurrence of a Default of Tenant, Landlord may terminate this Lease by delivery of written notice to Tenant, specifying a date not less than ten (10) days after the giving of such notice on which this Lease shall terminate and this Lease shall come to an end on the date specified therein as fully and completely as if such date were the date herein originally fixed for the expiration of the Term of this Lease, and Tenant will then quit and surrender the Premises to Landlord, but Tenant shall remain liable as hereinafter provided.

(b) If this Lease Shall have been terminated as provided in this Article 14, then Landlord may re-enter the Premises, either by summary proceedings, ejectment or

otherwise, and remove and dispossess Tenant and all other persons and any and all property from the same, as if • this Lease had not been made.

(c) If this Lease shall have been terminated as provided in this Article 14, then Tenant shall be obligated to pay all Basic Rent for the remainder of the Term, provided, however, that if Landlord relets the Premises, then Tenant’s obligation shall terminate as of the date of such reletting and in proportion to the portion of the Premises so relet.

14.3 Reletting. Landlord shall use its best efforts to relet the Premises or any part thereof for such period or periods (which may extend beyond the Term of this Lease) and at such rent or rents and upon such other terms and conditions as Landlord may deem advisable. All reasonable costs of reletting shall be charged to Tenant.

14.4 Remedies Cumulative. The specified remedies to which Landlord may resort hereunder are not intended to be exclusive of any remedies or means of redress to which Landlord may at any time be entitled lawfully, and Landlord may invoke any remedy (including the remedy of specific performance) allowed at law or in equity as if specific remedies were not herein provided for.

14.5 Waiver. No waiver of any Default of Tenant hereunder shall be implied from any acceptance by Landlord of any Basic Rent, Additional Rent or other charges due hereunder or any omission by Landlord to take any action on account of such Default, and no express waiver shall affect airy Default other than as specified in said waiver. Failure on the part of Landlord or Tenant to complain of any action or non-action on the part of the other, no matter how long the same may continue, shall never be a waiver by Tenant or Landlord, respectively, of any of the other’s rights hereunder. Further, no waiver at any time of any of the provisions hereof by Landlord or Tenant shall be construed as a waiver of any of the other provisions hereof, and a waiver at any time of any of the provisions hereof shall not be construed as a waiver at any subsequent time of the same provisions. The consent or approval of Landlord or Tenant to or of any action by the other requiring such consent or approval shall not be construed to waive or render unnecessary Landlord’s or Tenant’s consent or approval to or of any subsequent similar act by the other.

14.6 Landlord’s Default. Landlord shall in no event be in default under this Lease unless Landlord shall neglect or fail to perforn any of its obligations hereunder and shall fail to remedy the same within thirty (30) days after receipt of written notice to Landlord specifying such neglect or failure, or if such failure is of such a nature that Landlord cannot reasonably remedy the same within such thirty (30) day period, Landlord shall fail to commence promptly (and in any event within such thirty (30) day period) to remedy the same and thereafter to prosecute such remedy to completion with diligence and continuity. Notwithstanding the foregoing, in the case of electrical or telecommunications interruptions caused by Landlord’s Construction undertaken pursuant to Section 15.4 hereof; Landlord shall be in default under this Lease unless Landlord remedies the same within five (5) days after receipt of notice thereof from Tenant.

14.7 Attorneys’ Fees. Reasonable attorneys’ fees and expenses incurred by or on behalf of Landlord or Tenant in successfully enforcing its rights under this Lease shall be paid by the other party.

ARTICLE 15

MISCELLANEOUS PROVISIONS

15.1 Rights of Access. Tenant, its agents, contractors and employees shall have access to the Building, including access to and use of the Building elevator, twenty-four (24) hours per day, each day of the week. Landlord, its agents, contractors and employees shall have the right to enter the Premises upon reasonable prior notice during Tenant’s normal business hours, provided that a representative of Tenant is present (except in the event of an emergency, when no notice need be given and no representative of Tenant shall be necessary), for the purposes of inspecting the Premises, doing maintenance or making repairs or otherwise exercising its rights or fulfilling its obligations under this Lease, and Landlord also shall have the right to make access available upon reasonable prior notice during Tenant’s normal business hours to prospective or existing mortgagees, purchasers or tenants of any part of the Premises.

15.2 Covenant of Quiet Enjoyment. Subject to the terms and conditions of this Lease, Tenant shall lawfully, peaceably and quietly enjoy the Premises during the term hereof, without hindrance or ejection by any persons lawfully claiming under Landlord to have title to the Premises superior to Tenant.

15.3 Security. The Building is currently serviced by a security system, which provides security protection for the Premises and the first floor of the Building. Within thirty (30) days hereof, Landlord shall cause said security system to be re-configured so that the alarm coverage is segregated between the Premises and the first floor of the Building. Tenant shall reimburse Landlord its Pro Rata Share of such re-configuration cost, but in no event shall Tenant be obligated to reimburse Landlord for costs incurred by Landlord, if any, associated with any upgrades or additional improvements to said security system. Landlord shall pay the cost of the security coverage for the Building and Tenant shall reimburse Landlord monthly for costs associated with security coverage for the Premises.

15.4 Landlord Construction. Landlord shall not undertake any construction at the Building during the Term of this Lease, except that Landlord shall have the right to undertake any build-out related construction in the event that Landlord rents the First Floor Premises to a tenant who requires a build out prior to occupying said First Floor Premises. In the event that Landlord is required to undertake build-out construction for the First Floor Premises and/or Landlord undertakes any construction at the Building after the expiration of the Term of this Lease, Landlord agrees that it will undertake such construction in a such a manner and at such times as to not unreasonably disturb Tenant in its occupancy and use of the Premises or in its exercise of other tights hereunder. If Landlord

15.5 Brokerage. Tenant warrants and represents that Tenant has dealt with no broker in connection with the consummation of this Lease.

15.6 Invalidity of Particular Provisions. If any term or provision of this Lease, or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall

not be affected thereby, and each terra and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law.

15.7 Provisions Binding. Etc. Except as herein otherwise provided, the terms hereof shall be binding upon and shall inure to the benefit of the successors and assigns, respectively, of Landlord and Tenant (except in the case of Tenant, only such successors and assigns as may be permitted hereunder) and, if Tenant shall be an individual, upon and to his heirs, executors, administrators, successors and permitted assigns. Each term and each provision of this Lease to be performed by Tenant shall be construed to be both a covenant and a condition. Any reference in this Lease to successors and assigns of Tenant shall not be construed to constitute a consent to assignment by Tenant.

15.8 Recording. Neither this Lease, nor a memorandum of this Lease, shall be recorded by either party.

15.9 Notice. All notices or other communications required hereunder shall be in writing arid shall be deemed duly given if delivered in person (with receipt therefor), if sent by reputable overnight delivery or courier service (e.g., Federal Express) providing for receipted delivery, or if sent by certified or registered mail, return receipt requested, postage prepaid, to the following address:

(a) if to Landlord, at Landlord’s Address, to the attention of Taran T. Grigsby, Esq.

(b) if to Tenant, at Tenant’s Address, to the attention of Glenn Brack and to the following address:

997 Lenox Drive, Suite 111

Lawrenceville, New Jersey, 08648

Attention: Thomas M. O’Brien, Esq.

with a copy to Goodwin Procter LLP

Exchange Place

53 State Street

Boston, MA 02109

Attention: Lawrence R. Cahill, PC

Facsimile: (617) 227-8591

Notices, demands and requests given to Landlord and Tenant in the manner aforesaid shall be deemed to have been delivered on the delivery date shown, in the case of delivery by certified or registered mail, on the Postal Service’s certified or registered mail return receipt for such notice, or, in the case of delivery by a private express carrier, on the airbill or other delivery receipt for such delivery service, except that If any such notice is returned to the sender for any reason, the notice shall nevertheless be deemed conclusively to have been delivered on the earliest date on which delivery by the Postal Service or private express carrier was attempted. Every written notice hereunder shall take effect when delivered. Either party may change its address for the giving of notices by notice given in accordance with this Section 15.9.

15.10 When Lease Becomes Binding; Entire Agreement; Modification; Authority. The submission of this document for examination and negotiation does not constitute an offer to lease, or a reservation of, or option for, time Premises, and this document shall become effective and binding only upon the execution and delivery hereof by both Landlord and Tenant. This Lease is the entire agreement between Landlord and Tenant, and this Lease expressly supersedes any negotiations, considerations, representations and understandings and proposals or other written documents relating hereto. This Lease may be modified or altered only by written agreement between Landlord and Tenant, and no act or omission of any employee or agent of Landlord shall alter, change or modify any of the provisions hereof Landlord and Tenant each represent and warrant to the other that the person or persons executing this Lease on its behalf has or have authority to do so and that such execution has fully obligated and bound such party to all terms and provisions of this Lease.

15.11 Paragraph Headings and Interpretation of Sections. The paragraph headings throughout this instrument are for convenience and reference only, and the words contained therein shall in no way be held to explain, modify, amplify or aid in the interpretation, construction or meaning of the provisions of this Lease. The provisions of this Lease shall be construed as a whole, according to their common meaning (except where a precise legal interpretation is clearly evidenced), and not for or against either party. Use in this Lease of the words “including,” “such as” or words of similar import, when followed by any general term, statement or matter; shall not be construed to limit such term, statement or matter to the specified item(s), whether or not language of non-limitation, such as “without limitation” or “including, but not limited to,” or words of similar import, are ‘used with reference thereto, but rather shall be deemed to refer to all other terms or matters that could fall within a reasonably broad scope of such term, statement or matter.

15.12 Waiver of Jury Trial. Landlord and Tenant hereby each waive trial by jury in any action, proceeding or counterclaim brought by either against the other, on or in respect of any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant or Tenant’s use or occupancy of the Premises.

15.13 Time Is of the Essence. Time is of the essence of each provision of this Lease.

15.14 Multiple Counterparts. This Lease may be executed in multiple counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same document.

15.15 Governing Law. This Lease shall be governed by the laws of the state in which the Premises is located.

IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly executed, under seal, by persons hereunto duly authorized, as of the date first set forth above.

	LANDLORD:


	QUINCY HAYWARD STREET, LLC


	By:	/s/
		Name:
		Title: Manager


	TENANT:


	IMO INDUSTRIES, INC.


	By:	/s/
		Name: Thomas M. O’Brien
		Title: Senior Vice President and General Counsel

HOGAN & HARTSON

L.L.P


			111 SOUTH CALVERT STREET, SUITE 1600
	November 3, 2004		BALTIMORE, MARYLAND 21202
			TEL (410) 659-.2700
			FAX (410) 589-6981
			WWW.HHLAW.COM

Quincy Hayward Street, LLC

2181 Washington Street

Suite 101

Boston, Massachusetts 02119

Re: Lease Agreement with IMO Industries Inc.

Ladies & Gentlemen:

This firm represents IMO Industries Inc. (“IMO”) in connection with the proposed transfer of substantially all of the assets and certain liabilities related to its Boston Gear division (the “Transaction”) to Boston Gear LLC (“Boston Gear”), a wholly-owned subsidiary of Power Transmission Holding LLC, which is an affiliate of Colfax Corporation.

In connection with the Transaction, Quincy Hayward Street, LLC’s consent is required to assign the above-referenced Agreement (the “Agreement”), which is enclosed herewith, between IMO and Quincy Hayward Street, LLC to Boston Gear. This consent is required pursuant to Section 7.1 of the Agreement. Boston Gear has agreed to assume the obligation for continued performance on IMO’s part under the Agreement.

IMO hereby requests the consent of Quincy Hayward Street, LLC to the assignment of all of its rights and obligations under the Agreement to Boston Gear. Please indicate Quincy Hayward Street, LLC’s consent to such assignment by having this letter signed where indicated by an authorized representative of Quincy Hayward Street, LLC and returning it to me in the provided envelope at your earliest convenience.

WASHINGTON, DC

BERLIN BRUSSELS LONDON PARIS BUDAPEST PRAGUE WARSAW MOSCOW TOKYO

NEW YORK BALTIMORE McLEAN MIAMI DENVER BOULDER COLORADO SPRINGS LOS ANGELES

In the event that the Transaction is not consummated, this Assignment shall have no force or effect.

	Very truly yours,


	W. Bryan Rakes

Acknowledged and Agreed to:

Quincy Hayward Street, LLC

By:
	Authorized Officer


cc:	Thomas O’Brien, General Counsel

EX-10.8 38 a2155511zex-10_8.htm EXHIBIT 10.8

Exhibit 10.8

LEASE

THIS LEASE, made as of the 1st day of April 1993, by and between Textron ~Inc., a Delaware corporation, having an office at 40 Westminster Street, Providence, Rhode Island 02903 (“Lessor”) and Nuttall Gear Corporation, a Delaware corporation, P.O. Box 1032, Niagara Falls, NY 14302 (“Lessee”),

WITNESSETH:

In consideration of the mutual covenants and conditions herein contained, the parties hereto agree as follows:

ARTICLE I

1.01 Premises. Subject to the following terms and conditions, Lessor hereby leases to Lessee approximately 105,400 square feet of space (the “Area of the Premises”) as shown on Lessee’s Floor Plan annexed hereto as Exhibit A (the “Premises”) located in the building complex known as the Niagara International Trade Center located at 2221 Niagara Falls Boulevard, Wheatfield, New York (the “Complex”) and described more particularly on Exhibit B, Attachment B-1 annexed hereto.

1.02 Common Areas. In addition to all facilities which serve the Premises exclusively, Lessee shall have the right to use, in common with Lessor and other tenants: (i) the common lobbies, lavatories, corridors, stairways and elevators serving the Premises in common with other areas; (ii) common walkways necessary for access to the Premises; and (iii) loading dock areas.

1.03 Lease of Personal Property. The equipment listed in Exhibit “D” now located on the premises is leased to the Lessee for the term of the building lease for the sole benefit of the Lessee, AS IS, WHERE IS. The Lessee covenants and agrees not to remove, transfer, or assign any property leased hereunder and shall keep and maintain such property in its present state of operation and repair, normal wear and tear excepted, in accordance with good industrial with respect to the Lease. Lessee agrees to hold harmless and indemnify Lessor for any cost, damage, or expense arising in connection with the use of personal property leased hereunder by Lessee or invitees of Lessee.

10.4 Parking. Lessee and its officers, employees, agents, customers and invitees shall have the use of Parking Lot No. 3 adjacent to Gate Number 6 along Walmore Road, in common with Lessor and others whom Lessor has or hereinafter grants rights to use. Lessee shall also have eighteen (18) “on premises” parking spaces on north side of Building Number 2C; twelve (12) parking spaces on east side of Building Number 3; and eighteen (18) parking spaces in Parking Lot Number 2-A, north of Niagara Falls Boulevard, as shown and indicated on Exhibit “A”. Use of all parking areas are subject to such reasonable. rules and regulations as Lessor may from time to time impose, including the right to redesignate specific areas for parking.

ARTICLE II - TERM

The term of this Lease shall be for a period of five (5) years commencing on April 1, 1993 and ending on March 31, 1998. Lessor shall have the right to terminate this lease for default as provided herein.

ARTICLE III - USE OF PREMISES

Lessee may use and occupy the Premises for the purpose of manufacturing gears and gear drives, office space, and shipping and receiving, subject to applicable zoning ordinances and use restrictions and the provisions of this Lease, and for no other purpose without the prior, written consent of Lessor, Lessee,

its employees and invitees, shall comply with all laws, ordinances and regulations of all public authorities relating to the Premises and the use and occupancy thereof. In the event that any activity in or use of the Premises by Lessee, its employees or invitees, results in any increase in the premiums for any insurance maintained by Lessor, Lessee shall pay the amount of such increase to Lessor promptly when billed by Lessor. Lessee, its employees and invitees shall comply with the Regulations set forth in Exhibit C attached hereto and made a part hereof, as the same may be modified by Lessor from time to time.

ARTICLE IV - CONDITION OF PREMISES

Lessee represents and warrants that Lessee has examined the Premises and accepts the use and occupancy of the Premises as the same exist at the time of execution of this Lease.

ARTICLE V - DELIVERY OF POSSESSION

Lessor shall deliver possession of the Premises on the date of commencement of the Term. If Lessee shall occupy the Premises prior to the date of the commencement of the Term with the consent of the Lessor, such occupancy shall be subject to all of the terms and conditions of this Lease, including payment of rent and all other charges.

ARTICLE VI - RENT

6.01 Base Rent. Lessee shall pay to Lessor basic rent in the amount and in the manner as more fully appears on Exhibit B, Attachment B-3 (“Base Rent”). All rentals payable hereunder shall be subject to no offsets whatsoever. In the event that any installment of rent is not paid on the due date thereof, interest shall accrue and be payable by Lessee on each dollar so unpaid from the due date thereof at the rate of eighteen percent (18%) per annum, or, if lower, at the highest rate of interest legally chargeable to or payable by Lessee. All payments shall be made by Lessee to Lessor in monthly installments each due in advance on the first day of each every month during the term of the Lease at Lessor’s address set forth in the Lease or at such other address as Lessor may designate from time to time by written notice to Lessee.

6.02 Additional Rent. All other amounts payable to Lessor other parties by Lessee pursuant to any provision of their Lease or which are paid by Lessor after Lessee’s failure to pay in accordance with any such provision shall be deemed Additional Rent hereunder.

ARTICLE VII - ESCALATION FOR INCREASED BUILDING OPERATING EXPENSES AND TAXES

7.01 Operating Expenses. If Operating Expenses, as hereinafter defined, in any calendar year commencing with the calendar year specified in item 7.01(a) of Exhibit B, are more than the corresponding Operating Expenses during the Base Year (hereinafter, the “Base Year”) specified in item 7.01(b) of Exhibit B (the “Base Year Operating Expenses”), then Lessee shall pay to Lessor, as Additional Rent, Lessee’s Percentage Share, as defined below, of said Operating Expenses which exceed the Base Year Operating Expenses (“Excess Operating Expenses”), plus 5% of the Excess Operating Expenses as Lessor’s supervisory fee. For purposes of this Section 7.01, Operating Expenses shall mean and include any and all actual operating expenses paid or incurred by the Lessor for the operation, maintenance and servicing of the Complex, including, but not limited to, the following:

(i) The actual wages, salaries and benefits (including but not limited to vacation pay and union payments or benefits, if any) of all Complex employees engaged in the operation, repair and maintenance of the Complex, including employers’ social security taxes and any other taxes which may be levied on such wages and salaries;

(ii) All supplies and materials used in the operation and maintenance of the Complex, including but not limited to janitorial and Complex supplies;

(iii) The costs of all outside contractors providing services to the Complex, including, but not limited to, the following: security, pest control, plumbing, electrical, structural repair, elevator maintenance, rubbish removal, cleaning, snow removal, landscaping and signage and all costs of leasing equipment, machinery and vehicles for use in or about or for the benefit of the Complex;

(iv) Premiums paid on insurance for public liability, workers’ compensation, fire and extended coverage and other insurance attributable to the operation of the Complex;

(v) Maintenance, repair, and replacement of furnishing, fixtures, equipment and machinery at, and/or used for servicing the Complex;

(vi) The costs of all other items of general operation, repair and maintenance incurred by Lessor, exclusive of expenses for alterations of the Complex for the accommodation of a specific tenant or tenants; however, this shall not exclude painting of vacant tenant the Premises which shall be considered a normal operating expense;

(vii) The cost of necessary office supplies and expenses, legal expense, telephone service and reasonable accounting fees; and

(viii) Real property taxes, special district taxes, school taxes, assessments, special assessments and/or payments in lieu thereof assessed against the Complex or any portion hereof, any taxes on rents received from Lessees of the Complex and any personal property taxes assessed against equipment, machinery or vehicles used in or about the Complex or for the benefit thereof (“Taxes”),

but shall not include any cost, such as property taxes, the actual cost of which is allocated to and paid by Lessee, either by direct payment or reimbursement to Lessor.

In the event any charges are not entirely attributable to the operation and maintenance of the Complex, Lessor shall make a reasonable allocation of such charges to the extent attributable to the Complex.

7.02 Utility Costs. If “Utility Costs,” as hereinafter defined, in any calendar year commencing with the calendar year specified in item 7.02 of Exhibit B, are more than the corresponding Utility Costs for the Base Year (the “Base Year Utility Costs”), then Lessee shall pay to Lessor, as Additional Rent, Lessee’s Percentage Share, as defined below, of said Utility Costs which exceed the Base Year Utility Costs (“Excess Utility Costs”). For purposes of this Section 7.02, Utility Costs shall include all electricity, water and sewer services and/or usage charges provided to the Complex that are not separately metered and billed to tenants of the Complex.

7.03 Heating Costs. If the cost of heating the Premises (as determined by Lessor’s engineers), in any calendar year commencing with the calendar year specified in item 7.03 of Exhibit B, exceeds the corresponding cost of heating the Premises during the Base Year (“Base Year Heating Costs”), then Lessee shall pay to Lessor as Additional Rent, a sum equal to such increase in heating costs over the Base Year Heating Costs. For purposes of this provision, such increase, if any, will be calculated in the following manner:

(i) The actual fuel cost, including taxes for the January of the applicable calendar year will be multiplied times the annual fuel consumption rate calculated on a per square foot basis for the Premises (or type of space occupied by Lessee in the Complex), all as determined by Lessor’s engineers to arrive at the “Annual Per Square Feet Heat Cost”.

(ii) The Annual Per Square Foot Heating Cost will be multiplied by the number of rentable square feet in the Premises (as set forth in Section 1 of this Lease) to determine the Annual Heating Cost for the Premises for the applicable calendar year.

7.04 Lessee’s Percentage Share. For purposes of Subsections 7.01 and 7.02 of this Lease, Lessee’s Percentage Share shall be determined by Lessor by dividing the Area of the Premises by the total rentable square foot Area of the Complex specified in item 7.04 of Exhibit B and multiplying the resulting quotient (at least to the second decimal place) by one hundred. If the total rentable square foot Area of the Complex decreases for any reason, the Base Year Operating Expenses and the Utility Costs Allowance shall also be reduced proportionally to the reduction in the square footage of the Complex. However, if the Area of the Complex increases, Lessee shall not be responsible for any costs of acquisition, construction, servicing, or maintenance of any major expansions or addition to the Complex during the term of this Lease.

7.05 Payment of Estimated Charges. Lessor shall notify Lessee of Lessee’s estimated pro-rata share of Taxes, any Excess Operating Expenses, any Excess Utility Costs and the Annual Heating Cost (collectively, the “Lessee Charges”) for each calendar year or partial year during the Lease term and Lessee shall pay its share of such estimated tenant charges in equal monthly installments coincident with its payment of Base Rent. Lessor shall submit to Lessee within ninety (90) days following the close of each calendar year, a statement showing Lessee’s actual pro-rate share of Lessee Charges. If Lessee’s actual pro-rata share for such calendar year exceeds the amount paid by Lessee, Lessee shall pay to the Lessor the balance due within ten (10) days after demand therefor. If the aggregate amount paid by Lessee exceeds Lessee’s actual pro-rata share, such excess shall be paid to Lessee within ninety (90) days following calendar year end. Any sum due Lessee as a result of an overpayment during the last year of the Lease shall be paid to Lessee by Lessor no later than 90 days following completion of the last calendar year applicable to Lessee’s rights hereunder.

ARTICLE VIII - UTILITIES

Lessor shall furnish, at the expense of Lessee, electricity to Lessee through Lessor’s presently installed electrical facilities for Lessee’s reasonable use of lighting fixtures, electrical appliances, machinery and equipment as are currently installed in the Premises. Such electricity shall be separately metered and charged to Lessee as Additional Rent. In order to prevent Lessee from overloading the electrical distribution facilities of the Complex, Lessee shall make no alterations or additions to the electrical equipment and/or appliances used in the Premises without obtaining the prior written consent of Lessor in each such instance. Lessor shall not in any way be liable or responsible to Lessee for any loss, damage or expense which Lessee may sustain or incur if either the quantity or character of the electrical service is changed or is no longer available or suitable for Lessee’s requirements. If Lessee deems it necessary to install any riser or associated equipment to supply Lessee’s electrical requirements, Lessor shall, upon written request of Lessee, install such equipment, provided, however, the cost and expense of such equipment and installation thereof shall be borne by Lessee, and provided further that the installation of such additional equipment, in Lessor’s sole judgment, is necessary and will not cause or create a dangerous or hazardous condition, entail excessive or unreasonable alterations, repairs or expenses or interfere with or disturb other tenants or occupants of the Complex. Lessee shall furnish and install all lighting tubes, lamps, bulbs and ballasts required in the Premises at Lessee’s expense or shall pay Lessor’s reasonable charges therefor on demand.

Lessor shall furnish such heating, water, (except process or cleaning water), electrical and elevator service as, in its judgment, is necessary for the comfortable use and occupancy of the Premises. It is agreed that the interruption or failure of any such services shall not constitute an eviction or disturbance of Lessee’s use and possession of the Premises or a breach by Lessor of any of its obligations hereunder; that Lessor shall not by reason thereof be liable for damages, and Lessee shall not thereby be relieved of any of its obligations hereunder. Lessor agrees that it shall in all instances exercise reasonable diligence to restore any service which shall be interrupted.

If any payment of rent due hereunder shall remain unpaid for more than ten (10) days after it shall become due, Lessor may without notice to Lessee, discontinue furnishing heating, water and electrical services or any of them, until all arrears of rent have been paid in full, and Lessor shall not be liable for damages to person or property or the business of Lessee for any such discontinuance, nor shall such discontinuance in any way be construed as eviction of Lessee or cause an abatement of rent, or operate to release Lessee from any of Lessee’s obligations hereunder.

In the event that Lessee desires heating and electrical services at any time or times other than the hours stated above, and Lessor consents to the furnishing of such services at the time or times requested by Lessee, Lessee shall be charged for same during such periods at Lessor’s then standard hourly rate applicable during the periods when such services are furnished. Such rate may be changed by Lessor at any time and from time to time during the Lease.

In the event that Lessee holds over and continues to occupy all or any part of the Premises after the expiration hereof or after any earlier termination, whether with or without the consent of Lessor, such occupancy shall be construed as a tenancy from month to month, otherwise subject to the same terms, covenants and conditions as contained in this Lease, except that monthly rental shall be 130% of the monthly rental then in effect for the last month of the Lease. Notwithstanding the foregoing, Lessee shall be liable for all losses, damages, costs, and expense, including, without limitation, attorneys’ fees end disbursements suffered or incurred directly or indirectly by Lessor or any other party by reason of the failure or refusal by Lessee to vacate and surrender the Premises as and when required by the terms of this Lease.

ARTICLE IX - LESSEE’S MAINTENANCE AND ALTERATIONS

Lessee shall keep the Premises in good repair, and at the expiration of the Term shall yield and deliver up the same in like condition as when taken, reasonable use and wear thereof excepted. Lessee shall not make any alterations to the Premises without Lessor’s prior written consent, which may be withheld for any reason or, if granted, conditioned upon the use by Lessee only of such contractors as may then be employed or approved in writing by Lessor. Any alterations made shall be the property of Lessor and shall remain on and be surrendered with Premises on expiration or termination of this Lease, except that (i) Lessee may remove all movable office furniture and equipment installed by Lessee and (ii) Lessee may remove improvements, such as overhead crane rails, electrical conduit, circuit breakers and switches, air conditioners, humidifiers, furnaces, water heaters and drinking fountains, installed by Lessee during the term of the lease; provided, however, that Lessee shall fully repair (including cosmetic restoration) all damage to the Premises caused by the removal of any such items and shall deliver the Premises to Lessor in the same repair and operating condition as at the beginning of the term, excepting only ordinary wear and tear. Lessor may elect within thirty (30) days before expiration of this Lease, or within thirty (30) days after termination of this Lease, to require Lessee to remove any alterations that Lessee has made to the Premises. If Lessor so elects, Lessee at its cost shall restore the Premises to the condition designated by Lessor in its notice of election, before the last day of the Term, or within thirty (30) days after such notice of election is given, whichever is later. If Lessee fails to remove all of Lessee’s property and the property of others in the possession of Lessee from the Premises at the termination of the Lease, Lessor may remove and dispose of such property in any manner without liability therefor, and Lessee shall pay all charges for such removal and disposal upon demand by Lessor. Lessee shall indemnify Lessor against and hold Lessor harmless from any claim by other persons with respect to such property.

ARTICLE X - LIENS

Lessee shall not in any way encumber the title of Lessor in end to the Premises and Lessee shall not have any authority to create any liens or encumbrances for labor or materials on the Lessor’s interest in the Premises. Lessee shall keep the Premises and property in which the leased Premises are situated

free from any such liens and shall indemnify Lessor against and satisfy any such liens which may obtain because of acts of Lessee notwithstanding the foregoing prohibition.

ARTICLE XI - INDEMNIFICATION

11.01 Use and Occupancy. Lessee shall indemnify and hold Lessor harmless from and against any and all loss, cost, damage and expense, including reasonable attorneys’ fees, resulting from (a) any claim for damage or injury to any person or property arising out of or in any way connected with Lessee’s use and occupancy of, and ingress to and egress from, the Premises and adjoining areas, or (b) any act or omission of Lessee, its employees, agents, guests or invitees with respect to the Premises. In the event any action or proceeding is brought against Lessor by reason of any such claim, Lessee, upon notice from Lessor, shall defend the same at Lessee’s expense. Notwithstanding the foregoing, Lessor shall be liable for, and Lessee shall not be obligated to indemnify Lessor with respect to, any loss, damage or injury resulting from the sole negligence of Lessor or Lessor’s authorized representatives.

ARTICLE XII - INSURANCE

12.01 Insurance to be Maintained by Lessee. During the Term, Lessee shall, at its expense, carry and maintain (a) Workers Compensation and Employer’s Liability Insurance; (b) a commercial general liability insurance policy or policies or other, similar form of public liability insurance with a combined single limit of not less than $1,000,000 insuring against all liability of Lessee, its employees and representatives, arising out of or in connection with Lessee’s use or occupancy of the Premises; and (c) Automobile Liability Insurance with a combined single limit of not less than $1,000,000. The insurance policy required by clause (b) of the first sentence of this Section 12.01 shall contain contractual liability coverage which specifically insures Lessee’s indemnities contained in this Lease. The insurance policy or policies required by clause (b) of the first sentence of this Section 12.01 shall name Lessor as an additional insured with respect to personal injury, death and property damage claims. Each policy shall provide that (1) not less than thirty (30) days’ prior written notice shall be given to Lessor in the event of any alteration in the terms of such policy or of the cancellation or non-renewal thereof, (2) such policy shall not be invalidated as against Lessor or its assigns for any violation of any term of the policy or Lessee’s application therefor and (3) such insurance shall be primary insurance with respect to Lessor and any other insurance available to Lessor shall be secondary and excess of such insurance. Such insurance coverage may, however, be afforded by a “blanket” policy or policies maintained by Lessee with respect to all or a portion of Lessee’s activities on leased or owned properties. The limits specified above shall be adjusted from time to time during the Term, upon request by Lessor, to such higher limits, if any, as in Lessor’s judgment are customarily carried with respect to similar properties or risks or by reason of current experience. The amount of such required insurance coverage shall not limit Lessee’s obligations under this Lease. Lessor makes no representation whatsoever that the amount of such insurance coverage is adequate to protect Lessee from any liability or damage to which Lessee may become exposed. Lessee shall provide a copy of each such policy, or a certificate insurance, together with evidence of payment of premiums thereon, to Lessor prior to commencement of the Term and the Renewal Term hereof and from time to time during the Term upon the reasonable request of Lessor, and shall furnish Lessor with evidence of renewal of the policies not less than twenty (20) days before expiration of the terms of the policies. In the event Lessee provides a certificate of insurance, such certificate shall contain sufficient information for Lessor to determine if the underlying policy complies with provisions of this Lease. At all times during the Term, Lessee shall insure the contents of the Premises and all improvements added by Lessee during the Term against loss or damage by fire, including extended coverage.

12.02 Insurance to be Maintained by Lessor. Lessor shall, throughout the Term maintain on the building and other improvements that are part of the Premises a standard policy of fire and extended coverage insurance with vandalism, malicious mischief, special extended perils (all risk), sprinkler leakage, earthquake and flood hazard endorsements (subject to such deductibles as may be applicable to earthquake and flood hazard coverages) to the full replacement value thereof. The insurance policy

obtained by Lessor may, at Lessor’s option, include rental value insurance insuring that the minimum monthly rental will be paid to Lessor for a period of up to twelve (12) months if the Premises are destroyed or rendered inaccessible by a risk insured against by such policy of fire Insurance. The insurance policy shall be issued in the name of Lessor. The “full replacement value” of the building and other improvements required to be insured under this Section 12.02 shall be determined by the company issuing the insurance policy at the time the policy is initially obtained. Lessor may from time to time have the replacement value redetermined by the issuing insurance company, and the amount of the insurance policy shall be adjusted according to the redetermination for the full replacement value.

12.03 Mutual Release. Lessor and Lessee do hereby waive any and all right of recovery, claim, suit, or cause of action against the other, their respective agents and employees, for any loss or damage that may occur to the Premises or any additions or improvements thereto, or any contents therein, by reason of fire, the elements or any other causes whether or not such loss or damage is insured against under the terms of the respective policies of insurance required to be maintained by Lessor and Lessee pursuant to Section 12.01 and 12.02 and regardless of whether such loss or damage has been caused by the negligent acts or omissions of Lessor or Lessee or their respective agents and employees.

12.04 Waiver of Subrogation. Each party shall cause each insurance policy as required by this Lease to provide that the issuing insurance company waives all right of recovery by way of subrogation against either party in connection with any damage covered by any policy.

12.05 Insurance Policy Deductible. Notwithstanding the provisions of Sections 12.03 and 12.04, in the event of any loss caused by the negligence or misconduct of Lessee, Lessee shall be obligated for and Lessee shall pay to Lessor the deductible portion of any insured recovery Lessor otherwise would have been entitled to receive but for such deductible feature of the applicable insurance policy.

ARTICLE XIII - FIRE

If the Premises are damaged or destroyed by fire or other casualty insured under standard fire and extended coverage insurance, Lessor shall repair and restore the same with reasonable dispatch. The obligation of Lessor to restore is limited to the improvements owned and installed by Lessor on the date of commencement of the Term. Rent shall abate pro rata in proportion to the extent of untenantability until the Premises shall be restored to a tenantable condition. Notwithstanding any other provision herein, if damage to the Building is so extensive that the same cannot reasonably be repaired within 180 days, or if Lessor elects not to restore the Building to its form prior to the damage, Lessor or Lessee may terminate this Lease by notice in writing to the other. If the Premises are not restored to a tenantable condition within 180 days, other than by reason of causes beyond the reasonable control of Lessor, Lessee may terminate this Lease by notice in writing to Lessor within 15 days after the expiration of the 180-day period.

ARTICLE XIV - EMINENT DOMAIN

If all of the Premises or the use and occupancy thereof are taken under the power of eminent domain, this Lease shall terminate at the time of such taking. If any portion of the Building or the use and occupancy thereof shell be taken under the power of eminent domain and the remainder is unsuitable for Lessee’s purposes, Lessor or Lessee may, at any time within 30 days after the entry of the verdict or order for such taking, terminate this Lease by not less than 30 days’ notice in writing to the other party.

If this Lease is not so terminated, rent shall be reduced in proportion to the area of the Premises taken. All damages and compensation awarded for any taking under the power of eminent domain shall belong to and be the property of Lessor whether such damage or compensation be awarded for the leasehold or the fee or other interest of Lessor or Lessee in the Premises.

ARTICLE XV - MORTGAGES

Lessee acknowledges that Lessor may place one or more mortgages on the Premises and that this Lease is subject to any such mortgage or underlying lease now or hereafter placed upon or affecting the land and buildings of Lessor of which the Premises are a part. Lessee agrees to execute any and all instruments necessary to effect said subordination. The liability of the Lessor or Lessor’s assigns under this Lease shall exist as long as such person is the owner of the subject real estate. If any such mortgage is foreclosed, then, upon request of the mortgagee, Lessee will attorn to the purchaser at any foreclosure sale thereunder or the underlying Lessor and will execute such instruments as may be necessary or appropriate to evidence such attornment. Lessee shall deliver to Lessor or to its mortgagee, or auditors, or prospective purchaser, or to the owner of the fee, when requested by Lessor, a certificate to the effect that this Lease is in full force and that Lessor is not in default therein, or stating specifically any exceptions thereto. Failure to give such a certificate within ten (10) days after written request shall be conclusive evidence that the Lease is in full force and effect and Lessor is not in default and Lessee shall be stopped from asserting any defaults known to Lessee at that date.

ARTICLE XVI - DAMAGE

Lessor shall have no liability for any loss or damage that may be occasioned by or through the acts or omissions of others, including persons occupying other premises in the Building or other buildings in the Facility. Lessor shall have no liability for any loss or damage from water leakage from any source, or from leakage, overflow, stoppage or backing up or other condition of any facilities or utilities, or from fire, explosion or any other casualty, or for any loss or damage from any other cause whatsoever, including theft.

ARTICLE XVII - LESSOR’S RIGHT OF ENTRY

The Lessor shall have the right, at reasonable times and with reasonable notice during business hours during the Term, to enter the Premises for the purpose of examining or inspecting same and of making such repairs or alterations therein as the Lessor shall deem necessary. The Lessor shall also have the right to enter the Premises at all reasonable business hours for the purpose of displaying said Premises to prospective lessees or purchasers.

ARTICLE XVIII - QUIET ENJOYMENT

The Lessor covenants and agrees that Lessee, on paying the Rent and performing the covenants set forth herein, shall and may peaceably and quietly hold and enjoy the Premises for the Term without any hindrance or molestation from Lessor, subject to the terms and provisions of this Lease.

ARTICLE XIX - DELINQUENCY

If Lessee shall fail to pay or perform any obligation of Lessee hereunder and such failure shall continue for 10 days after written notice to Lessee with respect to a failure to pay or for 30 days after such notice with respect to any other obligation, except for matters affecting the safety, security or integrity of the Building as to which matters Lessee waives the requirement for such notice, or, unless such other obligation may not reasonably be performed within 30 days and Lessee has commenced and is proceeding diligently to cure such default, Lessor may, at Lessor’s option, pay or perform the same, in which event the amount expended by Lessor therefor shall be additional rent due and payable immediately.

ARTICLE XX - BANKRUPTCY

If Tenant becomes the subject debtor in a case under the Bankruptcy Code (11 U.S.C. 101 at seq.), and if Landlord’s right to terminate this Lease shall be subject to the rights of the Trustee therein to

assume or assign this Lease, then, to the extent permitted by law, the parties hereto agree that such Trustee shall not have the right to assume or assign this Lease until such Trustee

(a) promptly cures all defaults (declared and undeclared) under this Lease;

(b) promptly compensates Landlord for monetary damages incurred as a result of such default; and

(c) provides “adequate assurance of future performance,” which shall mean, in addition to any other requirements of 11 U.S.C. 365(b)(3), that all of the following have been satisfied: (i) In addition to all rents payable under the Lease, such Trustee shall establish with Landlord a security deposit equal to three (3) months’ rent; (ii) such Trustee shall maintain said security deposit in said amount whenever the same is reduced below said amount, (iii) such Trustee has agreed that the business in the Premises shall be conducted in a first-class manner, and (iv) the use limitations of the Premises, as hereinabove set forth, shall not change. If all the foregoing are not satisfied, Tenant and such Trustee shall be deemed not to have provided Landlord with adequate assurance of future performance of this Lease.

ARTICLE XXI - SECURITY DEPOSIT

As security for the faithful performance of all the terms, covenants and conditions of this Lease by Lessee, Lessee agrees to pay to Lessor upon execution of this Lease and in any case prior to occupancy the sum specified in item XXI Exhibit B under the caption, Security Deposit. At Lessor’s sole discretion, such security deposit may be applied against costs incurred, damages sustained or losses resulting from any defaults of or by Lessee hereunder. Lessor shall have the right to transfer and/or deliver such security deposit or any balance thereof to any purchaser of the Complex or successor to Lessor’s rights and obligations hereunder. Thereupon Lessor shall be discharged from any further liability in reference thereto. To the extent that Lessor shall from time to time apply all or any portion of such security deposit to any default of the Lessee under the terms and provisions of this Lease, Lessee agrees upon ten (10) days’ written notice to replenish such security deposit and failure to do so shall be deemed an Event of Default under Article XXII of this Lease. Within 90 days following the expiration of this Lease, Lessor shall return any portion of Lessee’s security deposit not required for restoration of the Premises.

ARTICLE XXII - DEFAULT BY LESSEE

Each of the following events shall constitute, and hereafter be referred to as, an “Event of Default”:

(a) if Lessee fails or refuses to pay any installment of rent as and when due hereunder unless payment in full thereof is made within five (5) days thereafter without any requirement for notice or demand by Lessor;

(b) if Lessee fails or refuses to perform, observe or comply with any covenant, agreement, duty or obligation of the Lessee strictly according to the terms of this Lease unless such failure or refusal is cured within thirty (30) days after receipt of notice thereof from Lessor;

(d) if Lessee’s interest in this Lease or in the Premises is encumbered or taken by attachment, lien, execution of other legal process;

(e) if any petition shall be filed by or against Lessee or any guarantor of this Lease in any court, whether or not pursuant to any statue of the United States or of any State, in any bankruptcy, reorganization, composition, extension, arrangement, receivership, insolvency or similar proceeding or if

Lessee, or if any guarantor of this Lease, shall be adjudicated bankrupt, or if any such petition shall be approved by the appropriate court or it the court shall assume jurisdiction of the subject matter thereof;

(f) if in any proceedings any receiver or trustee shall be appointed for Lessee’s property or the property of any guarantor of this Lease; or

(g) if Lessee shall vacate or abandon the Premises or any substantial part thereof.

Upon and at any time after the happening of any one or more of the aforesaid Events of Default, Lessee shall for all purposes be in default under this Lease and Lessor may, at its option, exercise any or all of its rights and/or remedies as provided in Section 22 of this Lease and as otherwise provided by law or In equity. Lessee hereby waives any right of redemption.

ARTICLE XXIII - RIGHTS AND REMEDIES OF LESSOR

Without limiting any other rights and remedies of Lessor, Lessor shall have the following rights and remedies upon and after any default by Lessee under this Lease:

(a) Lessor may terminate this Lease;

(b) With or without terminating this Lease, Lessor may re-enter the Premises and attempt to re-let the Premises or any part thereof and remove all persons and property from the Premises, and such property may be removed and stored in a public warehouse or elsewhere at the cost of, and for the account of, Lessee, all without service of notice or resort to legal process and without Lessor being deemed guilty of trespass or becoming liable for any loss or damage that may be occasioned thereby;

(c) Lessor may, at its option, with or without terminating this Lease, and without affecting Lessee’s other obligations and liabilities under this Lease, declare the entire amount of rent payable during the remainder of the term of this Lease immediately due and payable and collect such amount by any lawful procedure;

(d) Lessor may, but shall not be required to, re-let the Premises or any part thereof for such term or terms (which may be for a term extending beyond the term of this Lease) at such rental or rentals and upon such other terms and conditions as Lessor in its sole discretion may determine; and upon such re-letting, all rentals received by Lessor from such re-letting shall be applied first, to the payment of any indebtedness other than rent due hereunder from Lessee to Lessor; second, to the payment of any costs and expenses of such re-letting, including brokerage fees and attorneys’ fees; third, to the payment of rent unpaid hereunder as and if accelerated, and the residue, if any, shall be held by Lessor and applied to payment of future rent as the same may become due and payable hereunder; and no such re-entry or taking possession of the Premises by Lessor shall constitute an election on its part to terminate this Lease unless a notice of termination shall be given to Lessee or unless the termination thereof be decreed by a court of competent jurisdiction;

(e) Notwithstanding any re-letting of the Premises or an part thereof described in (b) and (d) above, without terminating this Lease, Lessor may at any time thereafter elect to terminate this Lease.

All of Lessor’s rights hereunder and at law are cumulative and the exercise of any rights shall not preclude the exercise of any other rights Lessor has or may have.

ARTICLE XXIV - BANKRUPTCY

If Lessee becomes the subject debtor in a case under the Bankruptcy Code (11 U.S.C. 101 et seq.), and If Lessor’s right to terminate this Lease shall be subject to the rights of the Trustee therein to

assume or assign this Lease, then, to the extent permitted by law, the parties hereto agree that such Trustee shall not have the right to assume or assign this Lease until such Trustee

(a) promptly cures all defaults (declared and undeclared) under this Lease;

(b) promptly compensates Lessor for monetary damages incurred as a result of such default; and

(c) provides “adequate assurance of future performance,” which shall mean, In addition to any other requirements of 11 U.S.C. 365Cb)(3), that all of the following have been satisfied: (i) in addition to all rents payable under the Lease, such Trustee shall establish with Lessor a security deposit equal to three (3) months’ rent; (ii) such Trustee shall maintain said security deposit in said amount whenever the same is reduced below said amount, (iii) such Trustee has agreed that the business in the Premises shall be conducted In a first-class manner, and (Iv) the use limitations of the Premises, as hereinabove set forth, shall not change. If all the foregoing are not satisfied, Lessee and such Trustee shall be deemed not to have provided Lessor with adequate assurance of future performance of this Lease.

ARTICLE XXV - DEFAULT BY LESSOR

The term “Lessor”, as used in this Lease, so far as covenants and agreements on the part of Lessor are concerned, shall be limited to mean and include only the owner or owners at the time in question of the rights granted Lessor in this Lease and, in the event of any transfer or transfers of the title to same, Lessor herein named (and, in case of any subsequent transfers or conveyances, the then grantor) shall be automatically freed and relieved from and after the date of such transfer and conveyance of all liability as respects the performance of any covenants and agreements on the part of Lessor. Lessor or the then grantor shall turn over to the grantee all monies and security, If any, then held by Lessor or subgrantor on behalf of Lessee and shall assign to such grantee all right, title and interest of Lessor of such grantor thereto.

Notwithstanding any contrary provision of this Lease, It Is specifically understood and agreed by Lessor and Lessee that there shall be absolutely no personal liability on the part of Lessor (including any director, officer, employee, shareholder, partner or agent thereof) or its successors with respect to any of the terms, conditions and covenants of this Lease, and that Lessee shall look solely to the interest of Lessor in the Complex for the satisfaction of each and every right and remedy of Lessee in the event of any breach or default by Lessor with respect to any terms, conditions or covenants of this Lease to be observed or performed by Lessor.

ARTICLE XXVI - LESSEE’S CERTIFICATE

Lessee shall, from time to time, within ten (10) days after request by Lessor, execute and deliver to Lessor a certificate confirming this Lease, the status thereof and of the Premises and Lessee’s occupancy thereof, in such form and with respect to such other matters as Lessor may reasonably request. Lessee shall not be entitled to withhold such certificate on the basis of any claimed default by Lessor hereunder.

ARTICLE XXVII - NOTICES

Any notice, statement, certificate, request, demand, or other communications (“Notices”) required or permitted to be given or delivered pursuant to this Lease shall be in writing either hand delivered, sent by registered or certified mail, postage prepaid, return receipt requested, or sent by a guaranteed nationally recognized overnight delivery service. Notices shall be deemed delivered immediately if delivered by hand, five (5) days after sending by registered or certified mail, or one (1) day after sending by guaranteed overnight delivery service. All notices to Lessor shall be addressed to:

Textron Inc.

40 Westminster Street

Providence, Rhode Island 02903

Attn: Director - Real Estate

or to such other address as Lessor may designate for itself in the manner herein provided. All Notices to Lessee shall be addressed to Lessee at the Premises or any other known address of Lessee.

ARTICLE XXVIII - SUCCESSORS AND ASSIGNS

Except to the extent otherwise provided herein, this Lease shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

ARTICLE XXIX - GOVERNING LAW AND JURY TRIAL

This Lease shall be governed by and interpreted under the laws of the State of New York. The parties hereby waive trial by jury in any action, proceeding or counterclaim brought by either party against’ the other arising out of this Lease or Lessee’s use or occupancy of the Premises.

ARTICLE XXX - INVALIDITY OF PARTICULAR PROVISIONS

If any term or provision of this Lease, or the application thereof, shall to any extent be invalid or unenforceable, the remainder of this Lease shall not be affected thereby, and each such term and provision of this Lease shall be valid and enforceable to the fullest extent permitted by law.

ARTICLE XXXI - ENTIRE AGREEMENT

This Lease, and the exhibits attached hereto, contains all of the covenants, promises and agreements between Lessor and Lessee concerning the Premises, and there are no covenants, promises, agreements, conditions, or understandings either oral or written, other than as herein set forth. No subsequent alteration, amendment, change or addition to this Lease shall be binding unless in writing and signed by the party to be bound thereby.

ARTICLE XXXII - WAIVER

The waiver by Lessor of any breach of any term covenant or condition herein contained is not intended, and shall not be deemed, to be a waiver of such term, covenant or condition or any subsequent breach of the same or any other term, covenant or condition therein contained. The subsequent acceptance of any rent or other sum by Lessor is not intended, arid shall not be deemed, to be a waiver of any prior breach by Lessee of any term, covenant or condition of this Lease, other then the failure of Lessee to pay the particular rent or other sum so accepted, regardless of Lessor’s knowledge of such prior breach at the time of such acceptance.

ARTICLE XXXIII - EFFECT OF CAPTIONS

The captions or legends in this Lease are inserted only for convenient reference or identification of the particular Sections. Such captions are in no way intended, and shall not be deemed, to describe, interpret, define, limit or extend the intent or extent of this Lease, or any term or provision hereof.

ARTICLE XXXIV - BROKER

Lessee warrants and represents that Lessee has not had any dealings with any realtor, broker, or agent, in connection with the negotiation of this Lease. Lessee agrees to pay and to hold Lessor harmless from any cost, expense (including reasonable costs of suit and attorneys’ fees) or liability for any

compensation, commission or charges claimed by any realtor, broker or agent other than those named above.

ARTICLE XXXV - RELOCATION OF LESSEE SPACE

Lessor shall have the right upon written notice, delivered at least thirty (30) days in advance of the proposed moving date specified in the notice, to move Lessee to comparable space within the Complex at Lessor’s cost and expense, including necessary moving and remodeling expenses, so that Lessee shall have, in the new location, facilities of comparable quality to that which it occupied hereunder.

ARTICLE XXXVI - ADDITIONAL TERMS AND CONDITIONS

All additional terms and conditions, if any, set forth in item XXXVI of Exhibit B under the caption, Additional Terms and Conditions, are an integral part of this Lease.

IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed by their duly authorized officers and/or agents as of the day and year first set forth above.

ATTEST:		LANDLORD: TEXTRON INC.


		By:


		TENANT: NUTTALL GEAR CORPORATION


		By:

Amendment No. 1 to lease

AMENDMENT NO. 1, dated as of the 1st day of July 1993 to the LEASE (the “Lease”) dated as of the 1st day of April 1993 by and between Textron Inc., a Delaware corporation, having an office at 40 Westminster Street, Providence, Rhode Island 02903 (“Lessor”) and Nuttall Gear Corporation, a Delaware corporation, P.O. Box 1032, Niagara Falls, NY 14302 (“Lessee”),

WITNESSETH:

WHEREAS, Lessee has obtained an allocation of low cost expansion power from the New York State Power Authority (“NYPA”), and

WHEREAS, in order for Lessee to accept this allocation, modifications must be made to the electrical distribution system at the Complex to allow for separate and direct metering by NYPA of Lessee’s electrical power utilization; and

WHEREAS, Textron and Nuttall desire to set forth their respective responsibilities concerning such modifications to the electrical distribution system and the changes to the Lease that are necessary as a result of such modifications.

In consideration of the mutual covenants and conditions contained herein and in the Lease, the parties hereto agree as follows:

I. Lessee shall engage an electrical contractor acceptable to Lessor to make modifications to the distribution system to allow for separate and direct metering by Niagara Mohawk Power Corporation of Lessee’s electrical power utilization (the “Modifications”). The Modifications shall be made in accordance with plans, described on Exhibit I attached hereto, that have been reviewed and accepted by the Niagara Mohawk Power Corporation. All costs associated with the Modifications shall be borne solely by Lessee.

II. Lessee shall make arrangements for metering equipment to be installed in the main substation by the Niagara Mohawk Power Corporation. Such metering equipment shall be installed at no cost to Lessor. The meter shall be in the name of Lessee and Lessee shall be direct billed by Niagara Mohawk Power Corporation for electricity.

III. Lessee shall be responsible for operation and maintenance at Lessee’s sole cost of all equipment and wiring associated with Lessee’s electrical power use from the line terminal at the feed or top of the switch gear installed by Lessee in the main substation. Lessee’s responsibility shall include but shall not be limited to maintenance of wiring, insulators, fuses, disconnects, poles and transformers that are dedicated to the distribution of power to the Premises. Lessee shall be required to obtain Lessor’s permission to gain access for Lessee’s approved contractor to the main substation.

IV. Lessor shall cause cleaning and routine maintenance to the power transformer known as the “Heat-treat substation transformer” to be verified by an electrical contractor reasonably acceptable to Lessee during the power shutdown scheduled for the Modifications. Responsibility for the transformer shall be assumed by Lessee when the transformer is re-energized and Lessee shall have no recourse to Lessor with respect to the condition or maintenance of the transformer after it is re-energized.

V. Lessee shall indemnify and hold Lessor harmless from and against any and all loss, cost, damage and expense, including reasonable attorneys’ fees, resulting from (a) any claim for damage or injury to any person or property arising out of or in any way connected with the Modifications and the power distribution system serving the Premises, Lessee’s use of the Modifications and the power distribution system serving the Premises and entry by Lessee, its employees, agents, or contractors upon the electrical substation premises or elsewhere in the Complex in connection with the operation and maintenance of the electrical distribution system serving the Premises, or (b) any act or omission of Lessee, its employees, agents, guests or invitees with respect to the Modifications or Lessee’s use, operation or maintenance of the Modifications and power distribution system serving the Premises. In the event any action or proceeding is brought against Lessor by reason of any such claim, Lessee, upon notice from Lessor, shall defend the same at Lessee’s expense. Notwithstanding the foregoing, Lessor shall be liable for, and Lessee shall not be obligated to indemnify Lessor with respect to, any loss, damage or injury resulting from the sole negligence of Lessor or Lessor’s authorized representatives.

VI. Lessee shall engage only electrical contractors reasonably acceptable to Lessor in the performance of the Modifications and maintenance of the Modifications and the power distribution system serving the Premises.

VII. Upon expiration or termination of the Lease or at such time as Nuttall deems the Modifications to be no longer necessary, Lessee may, at its option, either leave all improvements and modification in place or, if Lessee chooses to remove the Modifications, shall restore the electrical distribution system to its configuration and condition existing prior to the modifications and, if such election is made before expiration or termination of the Lease, Article VIII of the Lease shall be amended to read as it did before it was modified by this Amendment No. 1. Such configuration is shown on Exhibit VIII hereto, and Lessee acknowledges that the electrical distribution system as shown on Exhibit VU! is in good operating condition.

VIII. Effective as of the time of Heat-treat Substation Transformer is re-energized, Article VIII of the Lease shall be amended to read as follows:

ARTICLE VIII- UTILITIES

Lessee shall purchase electricity directly from Niagara Mohawk Power Corporation (“NMPC”) and shall be responsible for making payment for electricity directly to NMPC. Lessor shall have no obligation or responsibility to Lessee with respect to the provision of electricity to the Premises.

Lessee shall furnish and install all lighting tubes, lamps, bulbs and ballasts required in the Premises at Lessee’s expense or shall pay Lessor’s reasonable charges therefor on demand.

Lessor shall furnish such heating, water (except process or cleaning water), and elevator service as, in its judgment, is necessary for the comfortable use and occupancy of the Premises. It is agreed that the interruption or failure of any such services (and of electricity purchased directly by Lessee from NMPC) shall not constitute an eviction or disturbance of Lessee’s use and possession of the Premises or a breach by Lessor of any of its obligations hereunder; that Lessor shall not by reason thereof be liable for damages, and Lessee shall not thereby be relieved of any of its obligations hereunder. Lessor agrees that it shall in all instances exercise reasonable diligence to restore any service which shall be interrupted and which Lessor is obligated to provide hereunder.

either of them, until all arrears of rent have been paid in full, and Lessor shall not be liable for damage to person or property or the business of Lessee for any such discontinuance, nor shall such discontinuance in any way be construed an eviction of Lessee or cause an abatement of rent, or operate to release Lessee from any of Lessee’s obligations hereunder.

IX. Effective as of the date of this Amendment, the last paragraph of Article VIII of the Lease shall be redesignated for clarity as ARTICLE VIIIA - HOLDOVER. The text of that paragraph shall remain unchanged, as follows:

In the event that Lessee holds over and continues to occupy all or any part of the Premises after the expiration hereof or after any earlier termination, whether with or without the consent of Lessor, such occupancy shall be construed as tenancy from month to month, otherwise subject to the same terms, covenants and conditions as contained in this Lease, except that monthly rental shall be 130% of the monthly rental then in effect for the last month of the Lease. Notwithstanding the foregoing, Lessee shall be liable for all losses, damages, costs and expense, including, without limitation, attorneys’ fees and disbursements suffered or incurred directly or indirectly by Lessor or any other party by reason of the failure or refusal by Lessee to vacate and surrender the Premises as and when required by the terms of this Lease.

IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to Lease to be duly executed by their duly authorized officers and/or agents as of the day and year first set forth above.

ATTEST:		LANDLORD: TEXTRON INC.


		By:


		TENANT: NUTTALL GEAR CORPORATION


		By:

Amendment No. 2 to Lease

AMENDMENT NO. 2, dated as of the 21st day of October 1996, to that certain Lease dated as of the 1st day of April 1993 (the “Lease”) by and between Textron Inc., a Delaware corporation, having an office at 40 Westminster Street, Providence, Rhode Island 02903 (“Lessor”) and Nuttall Gear Corporation, a Delaware corporation, P. O.. Box 1032, Niagara Falls, NY 14302 (“Lessee”).

WITNESSETH:

WHEREAS, the Lease was amended by Amendment No. 1 dated as of the 1st day of July, 1993;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree to further amend the Lease as follows:

I. The term of the Lease extension shall be for a period of five (5) years commencing April 1, 1998 and ending March 31, 2003.

II. The Lessee may elect to extend the Lease for an additional five (5) years by giving Lessor written notice of its election on or before March 31, 2002. Lessor may choose to deny this option if leasing activity at the facility ceases by giving Lessee written notice of such effect on or before April 30, 2002.

III. Cost per Square Foot, Monthly Rental, and Annual Rental (collectively “Base Rent”) for the first two years of the Lease extension shall be as set forth in Exhibit B attached hereto. Base Rent for the third and each subsequent year of the Lease extension, including the sixth through tenth years if the Lease option is exercised by Lessee and accepted by Lessor, shall be subject to escalation calculated by reference to the Consumer Price Index for All Urban Consumers for the Chicago metropolitan area (the “Price Index”) published by the Bureau of Labor Statistics of the United States Department of Labor or any successor agency. In the event the Price Index is no longer published, Lessor and Lessee shall in good faith agree to a substitute index for the purpose of determining the adjustment to Base Rent due for each such year. Commencing with the third year of the Lease extension, Base Rent shall be calculated by multiplying the Base Rent in effect during the second year of the Lease extension by a fraction, the numerator of which shall be the Price Index published most recently before January 1, 2000 and the denominator of which shall be the Price Index published most recently before the January 1 immediately preceding the Lease year for which escalated Base Rent are being determined. In no event shall Base Rent for any year of the renewal period be less than Base Rent in effect during the second year of the Lease extension. The CPI rent increase will not exceed 4% per year.

IV. This Amendment shall serve as the amended lease document for Parcels A, B, C, D, E, F and G and except as amended herein, all other terms and conditions of the Lease dated April 1, 1993 shall remain in full force and effect and govern this transaction.

IN WITNESS WHEREOF, the parties have caused this Amendment No. 2 to Lease to be duly executed by their duly authorized officers and/or agents as of the day and year first set forth above.

ATTEST:	LANDLORD: TEXTRON INC.


	By:
		Executive Vice President Administration and Chief Human Resources Officer

	TENANT: NUTTALL GEAR CORPORATION


	By:

EXHIBIT B

ARTICLE VI – RENT

6.01 Base Rent

Base rent shall be paid plus pro-rata share of property taxes per square foot of complex and all metered utilities including, but not limited to electric, gas and water.

Base Rent shall be payable on Parcels A, C, D, and E (99,844 square feet) per the following schedule

Year	Dates	Cost per Square Foot		Monthly Rental		Annual Rental

1	4/1/98-3/31/99	$	3.20	$	26,625	$	319,501
2	4/1/99 - 3/31/2000	$	3.20	$	26,625	$	319,501
3	4/1/2000 - 3/31/2001	Subject to CPI Increase
4	4/1/2001 - 3/31/2002	Subject to CPI Increase
5	4/1/2002 - 3/31/2003	Subject to CPI Increase
6	4/1/2003 - 3/31/2004	Subject to CPI Increase
7	4/1/2004 - 3/31/2005	Subject to CPI Increase
8	4/1/2005 - 3/31/2006	Subject to CPI Increase
9	4/1/2006 - 3/31/2007	Subject to CPI Increase
10	4/1/2007 - 3/31/2008	Subject to CPI Increase

Base Rent shall be payable on Parcel B (2,200 square feet) per the following schedule:

Year	Dates	Cost per Square Foot		Monthly Rental		Annual Rental

1	4/1/98-3/31/99	$	4.60	$	843	$	10,120
2	4/1/99 - 3/31/2000	$	4.60	$	843	$	10,120
3	4/1/2000 - 3/31/2001	Subject to CPI Increase
4	4/1/2001 - 3/31/2002	Subject to CPI Increase
5	4/1/2002 - 3/31/2003	Subject to CPI Increase
6	4/1/2003 - 3/31/2004	Subject to CPI Increase
7	4/1/2004 - 3/31/2005	Subject to CPI Increase
8	4/1/2005 - 3/31/2006	Subject to CPI Increase
9	4/1/2006 - 3/31/2007	Subject to CPI Increase
10	4/1/2007 - 3/31/2008	Subject to CPI Increase

Base Rent shall be payable on Parcels F & G (3,356 square feet) per the following schedule:

Year	Dates	Cost per Square Foot		Monthly Rental		Annual Rental

1	4/1/98-3/31/99	$	1.00	$	280	$	3,356
2	4/1/99 - 3/31/2000	$	1.00	$	280	$	3,356
3	4/1/2000 - 3/31/2001	Subject to CPI Increase
4	4/1/2001 - 3/31/2002	Subject to CPI Increase
5	4/1/2002 - 3/31/2003	Subject to CPI Increase
6	4/1/2003 - 3/31/2004	Subject to CPI Increase
7	4/1/2004 - 3/31/2005	Subject to CPI Increase
8	4/1/2005 - 3/31/2006	Subject to CPI Increase
9	4/1/2006 - 3/31/2007	Subject to CPI Increase
10	4/1/2007 - 3/31/2008	Subject to CPI Increase

Amendment No. 3 to Lease

AMENDMENT NO. 3, dated as of the 18th day of February 1998, to that certain Lease dated as of the 1st day of April 1993 (the “Lease”) by and between Textron Inc., a Delaware corporation, having an office at 40 Westminster Street, Providence, Rhode Island 02903 (“Lessor”) and Nuttall Gear LLC (formerly Nuttall Gear Corporation), a Delaware Corporation, P. 0. Box 1032, Niagara Falls, NY 14302 (“Lessee”).

WITNESSETH:

WHEREAS, the Lease was amended by Amendment No. 1 dated as of the 1st day of July, 1993;

WHEREAS, the Lease was amended by Amendment No. 2 dated as of the 21st day of October, 1996;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree to further amend the Lease as follows:

I. Lease additional 17,454 square feet of space in Building Number 2 and 2B commencing February 01, 1998.

This area will be identified as Parcels “H”, “I”, “J”, and “K” as shown on Exhibit A attached and is described as follows:

Parcel	Location	Space/ Sq. Ft.	Description	Cost per Sq. Ft.		Monthly Rent
“H”	Bldg. No. 2— Col. 49N northwest 15 ft. then due north 28ft., then 15 ft. northeast to Col. 49R, then east to Col. 50 R, south to Col. 50N, then west to Col. 49N.	1,679	Dead Storage	$	1.00/yr.	$	140.00
“I”	Bldg. No. 2B – Col. 25V north to 25X, then east to Col. 29X, then south to 29V, then west to Col. 25	5,000	Manufacturing	$	3.20/yr.	$	1,333.00
“J”	Bldg. No. 2 – Col. 39J, north 40’ along 39, then east to a point 10’ east of Col. 40, then south along this line 40’ to a point 10’ east of 40J, then west to 39J.	1,400	Office	$	4.60/yr.	$	537.00

Parcel

Location

Space/
Sq. Ft.

Description

Cost per
Sq. Ft.

Monthly
Rent

“K”

Bldg. 2 – Col. 48N north to 48T, then west to Col. 44T, then south to 44N, then east to Col. 48N. less 625 sq. ft. of internal office space.

9,375

Storage

2.60/yr.

2,031.00

Total

17,454

4,041.00

The rent for Parcel “H” will be $1.00/sq. ft. per year payable in monthly installments of $140.00 and the term will be incorporated into the lease commencing February 01, 1998 until March 31, 2003.

The rent for Parcel “I” will be $3.20/sq. ft. per year payable in monthly installments of $1,333.00 and the term will incorporated into the lease commencing February 01, 1998 until March 31, 2003.

The rent for Parcel “3” will be $4.60/sq. ft. per year payable in monthly installments of S537.00 and will be incorporated into the lease commencing February 01, 1998 until March 31, 2003.

The rent for Parcel “K” will be $2.60/sq. ft. per year payable in monthly installments of $2,031.00 and the term will be month to month commencing February 01, 1998.

Base rent shall be paid plus pro-rata share of property taxes per square foot of complex and all metered utilities including, but not limited to electric, gas and water.

Rate increases for Parcel “H”, “I”, “3” and “K” will occur annually in years 3, 4 and 5 and will be tied into the Consumer Price Index as issued by the Bureau of Labor Statistics. If the Lease option is exercised, years 6 through 10 will be subject to annual CPI increases.

This addition will bring the new total area under lease to Nuttall Gear LLC to 122,854 square feet and the new total month rent shall be $31,789.00.

This letter shall serve as the amended lease document for Parcel “H”, “I”, “J”, “K” and except as amended herein, all other terms and conditions of our lease dated April 01, 1993 shall remain in full force and effect and govern this transaction.

ATTEST:	LANDLORD: TEXTRON INC.



		Alfred J. Casazza, Jr.
		Director of Real Estate and Power of Attorney for:
	By:
		John D. Butler
		Executive Vice President and Chief Human Resources Officer

	TENANT: NUTTALL GEAR CORPORATION


	By:
		Christopher C. Collins
		President

Amendment No. 4 to Lease

AMENDMENT NO. 4, dated as of the 12th day of June 1998, to that certain Lease dated as of the 1st day of April 1993 (the “Lease”) by and between Wheatfield Business Park, LLC (formerly Textron Inc., a Delaware corporation, having an office at 40 Westminster Street, Providence, Rhode Island 02903) (“Lessor”) and Nuttall Gear, LLC (formerly Nuttall Gear Corporation), a Delaware Corporation, P. 0. Box 1032, Niagara Falls, NY 14302 (“Lessee”).

WITNESSETH:

WHEREAS, the Lease was amended by Amendment No. 1 dated as of the 1st day of July, 1993;

WHEREAS, the Lease was amended by Amendment No. 2 dated as of the 21stday of October, 1996;

WHEREAS, the Lease was amended by Amendment No. 3 dated as of the 18th day of February, 1998;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree to further amend the Lease as follows:

I. Lease an additional 828 square feet of space in Building Number 2 commencing May 1, 1998.

This area will be identified as Parcel “L” as shown on Exhibit A attached and is described as follows:

Parcel

Location

Space/
Sq. Ft.

Description

Cost per
Sq. Ft.

Monthly
Rent

“L”

Bldg. No. 2— Col. 39L Due west 18 ft. then due north 36 ft., then due east 22 ft., then due south 44 ft.

828

Office

4.60/yr.

317.00

The rent for Parcel “L” will be $4.60/sq. ft. per year payable in monthly installments of $317.00 and the term will be incorporated into the lease commencing May 1, 1998.

Base rent shall be paid plus pro-rata share of property taxes per square foot of complex and all metered utilities including, but not limited to, electric, gas and water.

Rate increases for Parcel “L” will occur annually in years 3, 4 and 5 and will be tied into the Consumer Price Index as issued by the Bureau of Labor Statistics. If the Lease option is exercised, years 6 through 10 will be subject to annual CPI increases.

This addition will bring the new total area under lease to Nuttall Gear, LLC to 123,682 square feet and the new total month rent shall be $32,107.00.

This letter shall serve as the amended lease document for Parcel “L” and except as amended herein, all other terms and conditions of our lease dated April 01, 1993 shall remain in full force and effect and govern this transaction.

ATTEST:	WHEATFIELD BUSINESS PARK, LLC


	By:
		Peter Yanson Property Manager Quadrelle Realty Services – Agent for Owner

	TENANT: NUTTALL GEAR CORPORATION


	By:
		David Zietlow General Manager

Amendment No. 5 to Lease

AMENDMENT NO. 5, dated as of the 26th day of October 1998, to that certain Lease dated as of the 1st day of April 1993 (the “Lease”) by and between Wheatfield Business Park, LLC (formerly Textron Inc., a Delaware corporation, having an office at 40 Westminster Street, Providence, Rhode Island 02903) (“Lessor”) and Nuttall Gear, LLC (formerly Nuttall Gear Corporation), a Delaware Corporation, P. 0. Box 1032, Niagara Falls, NY 14302 (“Lessee”).

WITNESSETH:

WHEREAS, the Lease was amended by Amendment No. I dated as of the 1st day of July, 1993;

WHEREAS, the Lease was amended by Amendment No. 2 dated as of the 21st day of October, 1996;

WHEREAS, the Lease was amended by Amendment No. 3 dated as of the 18th day of February, 1998;

WHEREAS, the Lease was amended by Amendment No. 4 dated as of the 12th day of June, 1998;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree to further amend the Lease as follows:

I. Lease an additional 16,000 square feet of space in Building Number 2 commencing November 1, 1998.

This area will be identified as Parcel “M” as shown on Exhibit A attached and is described as follows:

Parcel

Location

Space/
Sq. Ft.

Description

Cost per
Sq. Ft.

Monthly
Rent

“M”

Bldg. No. 2— Col. 44T Due west to 37T then due south to 37N, then due east to 42N, then due north to 42P, then east to 44P.

16,000

Warehouse/Light Manufacturing

2.72/yr.

3,627.00

Additional Terms and Conditions

Tenant improvements to area by lessor will he as follows:

1.) Lessor to purchase 300 rectangular fluorescent tubes (150-watt equivalent) to fit incandescent light fixtures. Lessee shall install these light fixtures.

2.) Lessor to purchase and install electrical power meter.

The rent for Parcel “M” will be $2.72/sq. ft. per year payable in monthly installments of $3,627.00 and the term will be incorporated into the lease commencing November 1, 1998.

Base rent shall he paid by lessee plus pro-rata share of property taxes per square foot of complex and all metered utilities including, but not limited to, electric, gas and water.

Rate increases for Parcel “M” will occur annually in years 3, 4 and 5 and will he tied into the Consumer Price Index as Issued by the Bureau of Labor Statistics, if the Lease option is exercised, years 6 through 10 will be subject to annual CPI increases.

This addition will bring the new total area under lease to Nuttall Gear, LLC to 139,682 square feet and the new total month rent shall be $35,734.00.

This letter shall serve as the amended lease document for Parcel “M” and except as amended herein, all other terms and conditions of our lease dated April 01, 1993 shall remain in full force and effect and govern this transaction.

ATTEST:	WHEATFIELD BUSINESS PARK, LLC


	By:
		Peter Yanson Property Manager Quadrelle Realty Services – Agent for Owner

	TENANT: NUTTALL GEAR CORPORATION


	By:
		A. Carl Becker Vice President of Engineering

Amendment No. 6 to Lease

AMENDMENT NO 6, dated as of the 16th day of March 1999, to that certain Lease dated as of the 1st day of April 1993 (the “Lease”) by and between Wheatfleld Business Park, LLC (formerly Textron Inc., a Delaware corporation, having an office at: 40 Westminster Street, Providence, Rhode Island 02903) (“Lessor”) and Nuttall Gear, LLC (formerly Nuttall Gear Corporation), a Delaware Corporation, P.O. Box 1032, Niagara Falls, NY 14302 (“Lessee”).

WITNESSETH:

WHEREAS, the Lease was amended by Amendment No. 1 dated as of the 1st day of July, 1993;

WHEREAS, the Lease was amended by Amendment No. 2 dated as of the 21st day of October, 1996;

WHEREAS, the Lease was amended by Amendment No. 3 dated as of the 18th day of February, 1998;

WHEREAS, the Lease was amended by Amendment No. 4 dated as of the 12th day of June, 1998;

WHEREAS, the Lease was amended by Amendment No. 5 dated as of the 26th day of October 1998;

NOW, THEREFORE, in consideration of the mutual covenants arid agreements contained herein, the parties hereto agree to further amend the Lease as follows:

I. Vacate the leased area previously described as Parcels “A”, “B”, “J”, and “L” (collectively 11,763 square feet), and relocate into the leased area described herein as Parcel “N” and Parcel “O”.

II. Lease that area described as Parcel “N” which is 10,000 square feet of office space in Building Number 2 commencing May 1, 1999.

III. Lease that area described as Parcel “O” which is 1,340 square feet of storage space in Building Number 2 commencing May 1, 1999.

IV. Parcel “N” and Parcel “O” will both be subject to an annual CPI rent increase commencing April 1, 2000. The CPI rent increase will not exceed 4% per year.

V. Lessee hereby elects to exercise early lease option, which will commence April 1, 2003 and which will end March 31, 2008.

VI. Commencing April 1, 2003, Lessor will adjust “Lessee’s Percentage Share”, discussed in Section 7.04 and Exhibit B of the original Lease document dated April 1, 1993, with regard to Tenant’s proportionate share of real estate taxes, to reflect the “Total Rentable Square Footage Area of the Complex” (1,100,000 square feet), as opposed to the “Total Square Footage” (1,848,923 square feet) currently being used.

Parcel “N” as shown on Exhibit A attached and described as follows:

Parcel

Location

Space/
Sq. Ft.

Description

Cost per
Sq. Ft.

Monthly
Rent

“N”

Bldg. No. 2— South Mezzanine

10,000

Office

4.34/yr.

3,616.67

*The $4 34/yr rate breaks down as $3 50 per square foot gross, plus $ 84 per square foot which represents the amortization of the $50,000 00 improvement cost over the remaining initial term, occupancy beginning 5/1/99, through the last month of the last year of the option term which is 3/31/2008. Any rate increases will be applied to the $3.50 per square foot figure only (with regard to Parcel “N”.)

Parcel “O” as shown on Exhibit A attached and described as follows:

Parcel

Location

Space/
Sq. Ft.

Description

Cost per
Sq. Ft.

Monthly
Rent

“O”

Bldg. No. 2— South Mezzanine

1,340

file storage

2.00/yr.

223.33

Additional Terms and Conditions

Tenant improvements to area by lessor will be as follows:

1.) Lessor to clean the area.

2.) Lessor to install HVAC system.

3.) Lessor to install 3 doors.

4.) Lessor to make area restrooms functional.

The rent for Parcel “N” will be $4.34/sq. ft. per year payable in monthly installments of $3,616.67 and the term will be incorporated into the lease commencing-May 1, 1999. The rent for Parcel “0” will be $2.00/sq. ft. per year payable in monthly installments of. $223.33 and the term will be incorporated into the lease commencing May 1, 1999.

Lessee shall pay base rent plus pro-rata share of property taxes per square foot of complex and all metered utilities including, but not limited to, electric, gas, water and office air-conditioning. Lessor shall pay for the cost of heat for Parcel “N” and Parcel “O”.

Rate increases for Parcel “N” and Parcel “0” will occur annually in years 3, 4 and 5 and will be tied into the Consumer Price Index as issued by the Bureau of Labor Statistics. Since the lease option is being exercised, years 6 through 10 will be subject to annual CPI increases.

This addition will bring the new total area under lease by Nuttall Gear, LLC to 139,259 square feet and the new total month rent shall be $35,921 00.

This letter shall serve as the amended lease document for Parcel “N” and Parcel “O” and except as amended herein, all other terms and conditions of our lease dated April 01, 1993 shall remain in full force and effect and govern this transaction

ATTEST:	WHEATFIELD BUSINESS PARK, LLC


	By:
		Peter Yanson Property Manager Quadrelle Realty Services – Agent for Owner

	TENANT: NUTTALL GEAR CORPORATION


	By:
		David Zietlow General Manager
SUSAN E. SARDINA Notary Public, State of New York No. 01SA5066460 Qualified in Niagara County Commission Expires September 30, 2000

EX-10.9 39 a2155511zex-10_9.htm EXHIBIT 10.9

Exhibit 10.9

LEASE AGREEMENT

between

OLDS PROPERTIES CORPORATION

and

JOHN H.O. La GATTA

as Landlord,

and

WARNER ELECTRIC COMPANY

as Tenant

Date: January 29, 2003

TABLE OF CONTENTS

ARTICLE I		BASIC LEASE TERMS AND DEFINITIONS
	SECTION 1.1		Basic Lease Terms
	SECTION 1.2		Terms Generally
	SECTION 1.3		Attachments

ARTICLE II		AGREEMENT; DEMISE
	SECTION 2.1		Agreement
	SECTION 2.2		Demise

ARTICLE III		TERM
	SECTION 3.1		Initial Term
	SECTION 3.2		Renewal Terms
	SECTION 3.3		Holding Over

ARTICLE IV		USE
	SECTION 4.1		Use
	SECTION 4.2		Cessation of Tenant Operations

ARTICLE V		RENTAL AND SECURITY DEPOSIT
	SECTION 5.1		Rentals Payable
	SECTION 5.2		Annual Basic Rental
	SECTION 5.3		Payment of Rental
	SECTION 5.4		Security Deposit

ARTICLE VI		TAXES
	SECTION 6.1		Payment by Lessee
	SECTION 6.2		Proration of Taxes
	SECTION 6.3		Taxes on Rental
	SECTION 6.4		Tenant’s Right to Contest Taxes

ARTICLE VII		PREMISES IMPROVEMENTS
	SECTION 7.1		Mechanics’ Liens
	SECTION 7.2		Tenant’s Trade Fixtures
	SECTION 7.3		Risk of Loss

ARTICLE VIII		OPERATIONS
	SECTION 8.1		Operations by Tenant
	SECTION 8.2		Signs and Advertising

ARTICLE IX		IMPROVEMENT ALLOWANCE; MAINTENANCE AND REPAIRS
	SECTION 9.1		Improvement Allowance
	SECTION 9.2		Maintenance and Repairs
	SECTION 9.3		Alterations
	SECTION 9.4		Tenant Liens

ARTICLE X		UTILITIES
	SECTION 10.1		Water, Gas, Electricity, Telephone, and Sanitary Sewer

ARTICLE XI		INSURANCE; INDEMNIFICATION
	SECTION 11.1		Indemnity by Tenant
	SECTION 11.2		Tenant’s Insurance
	SECTION 11.3		Tenant’s Insurance Policies
	SECTION 11.4		Waiver of Subrogation
	SECTION 11.5		Insurance Proceeds

ARTICLE XII		DAMAGE AND DESTRUCTION
	SECTION 12.1		Landlord’s Repair upon Casualty

ARTICLE XIII		CONDEMNATION
	SECTION 13.1		Termination of Lease
	SECTION 13.2		Continuation of Lease
	SECTION 13.3		Apportionment of Award

ARTICLE XIV		ASSIGNMENT AND SUBLEASING
	SECTION 14.1		Landlord’s Consent
	SECTION 14.2		Transfer of Interest

ARTICLE XV		DEFAULT
	SECTION 15.1		“Event of Default” Defined
	SECTION 15.2		Remedies
	SECTION 15.3		Damages
	SECTION 15.4		Assignment in Bankruptcy

ARTICLE XVI		SUBORDINATION AND ATTORNMENT
	SECTION 16.1		Subordination
	SECTION 16.2		Mortgagee’s Unilateral Subordination
	SECTION 16.3		Attornment
	SECTION 16.4		Non-Disturbance

ARTICLE XVII		NOTICES
	SECTION 17.1		Sending of Notices

ARTICLE XVIII		QUIET ENJOYMENT
	SECTION 18.1		Warranty

ARTICLE XIX		RIGHT OF FIRST OFFER AND RIGHT OF FIRST REFUSAL
	SECTION 19.1		Right of First Offer
	SECTION 19.2		Right of First Refusal

ARTICLE XX		MISCELLANEOUS
	SECTION 20.1		Estoppel Certificates
	SECTION 20.2		Inspections and Access by Landlord
	SECTION 20.3		Memorandum of Lease

	SECTION 20.4	Remedies Cumulative
	SECTION 20.5	Successors and Assigns
	SECTION 20.6	Compliance with Laws and Regulations
	SECTION 20.7	Captions and Headings
	SECTION 20.8	Broker’s Commission
	SECTION 20.9	No Joint Venture
	SECTION 20.10	No Option
	SECTION 20.11	No Modification
	SECTION 20.12	Severability
	SECTION 20.13	Third Party Beneficiary
	SECTION 20.14	Authority; Good Standing
	SECTION 20.15	Applicable Law
	SECTION 20.16	Performance of Landlord’s Obligations by Mortgagee
	SECTION 20.17	Hazardous Substances
	SECTION 20.18	Net Lease
	SECTION 20.19	Tenant Information
	SECTION 20.20	Tenant questionnaire
	SECTION 20.21	Time of Essence
	SECTION 20.22	Surrender of Lease Not Merger
	SECTION 20.23	Landlord; Transfer by Landlord

LEASE AGREEMENT

THIS LEASE AGREEMENT (this “Lease”) is made effective as of the 29th day of January, 2003 by and between OLDS PROPERTIES CORPORATION, a Delaware corporation (“Olds”), and JOHN H.O. La GATTA (“La Gatta”) (collectively, “Landlord”), and WARNER ELECTRIC COMPANY, a Delaware corporation, its successors and assigns and any successor thereto by consolidation, merger or acquisition of all or substantially all of its assets (“Tenant”).

RECITALS:

A. Olds is the owner of certain real property containing approximately 13 acres located at 701 I-85 North in the City of Charlotte, Mecklenburg County, North Carolina, identified by Tax Parcel ID #039-053-16, and further described on Exhibit A attached hereto and incorporated herein by this reference (the “Land”), upon which is located an industrial building (the “Building”) and certain other improvements, which Building and other improvements are owned by La Gatta, and all appurtenances thereto (the Land, Building, other improvements and appurtenances are hereinafter collectively referred to as the “Property”).

B. Subject to and upon the terms, provisions and conditions hereinafter set forth, Landlord does hereby lease, demise and let to Tenant, and Tenant does hereby lease and take from Landlord, the Property on the terms and conditions set forth in this Lease.

AGREEMENT:

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained in this Lease and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby covenant and agree as follows:

ARTICLE I
BASIC LEASE TERMS AND DEFINITIONS

SECTION 1.1 Basic Lease Terms.

The terms set out and defined in this Section, whenever used in this Lease with the first letter of each word capitalized, shall have only the meanings set forth in this section, unless such meanings are expressly modified, limited or expanded elsewhere in this Lease.

1.1.1 “Additional Rental” shall mean all sums payable by Tenant pursuant to this Lease, except Annual Basic Rental.

1.1.2 “Affiliate” is any individual, corporation, limited liability company, trust or other entity which directly or indirectly controls or is directly or indirectly controlled by or is under common control with Tenant. For purposes of this definition, “control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such corporation, limited liability company or other entity, whether through the ownership of voting securities or by contract or otherwise.

1.1.3 The “Annual Basic Rental” for the Property shall be as follows for the Initial Term of the Lease:

Period	Annual		Monthly

March 1, 2003 - February 29, 2004	$	444,000.00	$	37,000.00
March 1, 2004 - February 28, 2005	$	444,000.00	$	37,000.00
March 1, 2005 - February 28, 2006	$	456,000.00	$	38,000.00
March 1, 2006 - February 28, 2007	$	456,000.00	$	38,000.00
March 1, 2007 - February 29,2008	$	468,000.00	$	39,000.00
March 1, 2008 - February 28, 2009	$	468,000.00	$	39,000.00
March 1, 2009 - February 28, 2010	$	480,000.00	$	40,000.00
March 1, 2010 - February 28, 2011	$	480,000.00	$	40,000.00
March 1, 2011 - February 29,2012	$	492,000.00	$	41,000.00
March 1, 2012 - February 28,2013	$	492,000.00	$	41,000.00

The Annual Basic Rental for the Property shall be as follows for the First Renewal Term of the Lease, if exercised:

Period	Annual		Monthly

March 1, 2013 - February 28, 2014	$	501,840.00	$	41,820.00
March 1, 2014 - February 28, 2015	$	511,876.80	$	42,656.40
March 1, 2015 - February 29, 2016	$	522,114.36	$	43,509.53
March 1, 2016 - February 28, 2017	$	532,556.64	$	44,379.72

The Annual Basic Rental for the Property shall be as follows for the Second Renewal Term of the Lease, if exercised:

Period	Annual		Monthly

March 1, 2017 - February 28, 2018	$	543,207.72	$	45,267.31
March 1, 2018 - February 28, 2019	$	554,071.92	$	46,172.66
March 1, 2019 - February 29, 2020	$	565,153.32	$	47,096.11
March 1, 2020 - February 28, 2021	$	576,456.36	$	48,038.03

The Annual Basic Rental for the Property shall be as follows for the Third Renewal Term of the Lease, if exercised:

Period	Annual		Monthly

March 1, 2021 - February 28, 2022	$	587,985.48	$	48,998.79
March 1, 2022 - February 28, 2023	$	599,745.24	$	49,978.77
March 1, 2023 - February 29, 2024	$	611,740.20	$	50,978.35
March 1, 2024 - February 28, 2025	$	623,975.04	$	51,997.92

1.1.4 “Default Rate” shall be an annual rate of interest equal to the lesser of (i) the maximum rate of interest which may lawfully be charged or collected, or (ii) twelve percent (12%) per annum.

1.1.5 “Event of Default” shall have the meaning set forth in Section 15.1.

1.1.6 “Force Majeure” shall mean any event the occurrence of which prevents or delays the performance by Landlord or Tenant of any obligation imposed upon it hereunder (other than the payment of money) and the prevention or cessation of which event is beyond the reasonable control of the obligor.

1.1.7 “GAAP” shall mean Generally Accepted Accounting Principles.

1.1.8 “Hazardous Substances” shall have the meaning set forth in Section 20.17.

1.1.9 “Improvements” shall mean any and all buildings, structures, and other improvements now or hereafter located on the Property.

1.1.10 “Initial Termination Date” shall mean 11:59 P.M. on February 28, 2013.

1.1.11 “Lease Termination Date” shall mean the earlier to occur of (i) 11:59 P.M. on the Initial Termination Date, as that date may be extended by Tenant in accordance with Section 3.2 and (ii) the date that this Lease is terminated pursuant to the express terms hereof.

1.1.12 “Mortgage” shall have the meaning set forth in Section 16.1.

1.1.13 “Mortgagee” shall have the meaning set forth in Section 16.1.

1.1.14 “Permitted Uses” shall mean office and manufacturing related to the manufacturing of gears, clutches and power transmission devices, heat treating and painting, including the use of floor mounted hoists and related warehousing, assembly and distribution activities. Notwithstanding the foregoing, any use prohibited by any applicable law, regulation or ordinance (including zoning laws) shall not be a Permitted Use under this Lease.

1.1.15 “Premises” shall mean the Property.

1.1.16 “Property” shall have the meaning set forth in the Recitals.

1.1.17 “Renewal Terms” shall have the meaning set forth in Section 3.2.

1.1.18 “Rent Commencement Date” shall be the date that is one (1) month following the Turnover Date.

1.1.19 “Rental” shall mean the Annual Basic Rental plus all Additional Rental hereunder.

1.1.20 “Rental Year” shall mean a period of one (1) calendar year; provided, however, the first Rental Year shall commence on the Rent Commencement Date and expire on February 29, 2004. Each subsequent Rental Year shall commence on March l^st and expire on February 28^th (or February 29^th if applicable) of the following calendar year.

1.1.21 “Taking” shall have the meaning set forth in Section 13.1.

1.1.22 “Taxes” shall have the meaning set forth in Section 6.1.

1.1.23 “Tenant Notice Address” shall mean 997 Lenox Drive, Suite 111, Lawrenceville, New Jersey 08648, Attention: General Counsel.

1.1.24 “Term” shall mean the period of time during this Lease between the Rent Commencement Date and the Lease Termination Date.

1.1.25 “Turnover Date” shall mean the date on which exclusive possession of the Premises is tendered to Tenant as provided in this Lease, whether or not Tenant actually takes possession.

SECTION 1.2 Terms Generally.

All accounting terms not specifically defined herein shall be construed in accordance with GAAP. The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. All references to Articles, Sections and Exhibits shall be deemed references to Articles and Sections of, and Exhibits to, this Lease unless the context shall otherwise require.

SECTION 1.3 Attachments.

All of the attachments to this Lease, as well as all drawings and documents prepared pursuant thereto, are incorporated herein and shall be deemed to be a part hereof for all purposes.

ARTICLE II
AGREEMENT; DEMISE

SECTION 2.1 Agreement.

This Lease shall be effective on the date hereof as a valid and binding agreement and contract between Landlord and Tenant.

SECTION 2.2 Demise.

Landlord hereby leases, rents and demises to Tenant, and Tenant hereby leases, rents, demises and accepts from Landlord, the Premises on the terms and conditions contained herein.

ARTICLE III
TERM

SECTION 3.1 Initial Term.

(a) The initial term of the Lease shall commence on the Rent Commencement Date and shall terminate on the Initial Termination Date (the “Initial Term”), without the necessity of any notice from either Landlord or Tenant.

(b) Within ten (10) days following the Turnover Date, Landlord shall provide to Tenant copies in Landlord’s possession or control of all available operating manuals and repair and maintenance guidelines and brochures, warranties and guaranties, if any, relating to equipment and machinery serving or comprising a portion of the Improvements.

(c) During the period after the Turnover Date but before the Rent Commencement Date (and concurrent commencement of the Term) all terms and conditions of this Lease shall apply except the payment of Annual Basic Rental.

SECTION 3.2 Renewal Terms.

Subject to the terms and conditions of this Section 3.2, Tenant shall have three (3) options (the “Renewal Options”) to extend the term of this Lease, as to not less than the entire Premises, each for four (4) years (the “Renewal Terms”). The first Renewal Term shall commence upon the date following the date the Initial Term would expire, the second Renewal Term shall commence upon the date following the date the first Renewal Term would expire, and the third Renewal Term shall commence upon the date following the date the second Renewal Term would expire, each upon the same terms and conditions previously applicable, except that (i) the Annual Basic Rental will be adjusted as provided in Section 1.1.3 above, and (ii) Tenant shall have no further extension options. Each Renewal Option may be validly exercised only by written notice to Landlord from Tenant no later than twelve (12) months prior to commencement of the respective Renewal Term. If Tenant does not exercise a Renewal Option during the exercise period set forth above in accordance with the provisions hereof, such Renewal Option and each succeeding Renewal Option shall forever terminate and be of no further force and effect. The Initial Term, together with any exercised Renewal Terms, shall hereinafter be referred to as the “Term”. Tenant’s right to exercise each of the Renewal Options is subject to the following condition which may be exercised or waived solely by Landlord in Landlord’s sole discretion: both at the time of Tenant’s exercise of each Renewal Option and at the time of the commencement of each Renewal Term, no Event of Default (as defined in Section 15.1 of this Lease) shall exist.

SECTION 3.3 Holding Over.

Subject to the terms of Article XIX of this Lease, if Tenant shall be in possession of the Premises after the Lease Termination Date with Landlord’s acquiescence but in the absence of an express agreement extending the Term hereof, the tenancy under this Lease shall become a lease from month to month, terminable by either party upon thirty (30) days prior written notice. Such tenancy shall be subject to all other conditions, provisions and obligations of this Lease, and the Annual Basic rental shall be equal to 110% of the amount paid during the immediately preceding

Rental Year. If Tenant shall be in possession of the Premises after the Lease Termination Date without Landlord’s acquiescence, the tenancy under this Lease shall become a tenancy at will, terminable by either party upon fifteen (15) days prior written notice. Such tenancy shall be subject to all other conditions, provisions and obligations of this Lease, except that the Annual Basic Rental shall be 125% of the amount paid during the previous Rental Year. Nothing herein shall be deemed to permit Tenant to retain possession of the Premises without Landlord’s acquiescence after the expiration or termination of this Lease, and Tenant shall be liable for all damage, cost and expense, including consequential damages, that may arise from or be caused by the retention by Tenant of possession after the termination or expiration hereof.

ARTICLE IV
USE

SECTION 4.1 Use.

The Premises shall only be used for the Permitted Uses and for no other purpose without Landlord’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed.

SECTION 4.2 Cessation of Tenant Operations.

Tenant shall have no obligation to operate its or any business from the Premises and shall have the right at any time and from time to time to cease operating its or any business at the Premises. Tenant acknowledges and agrees that its right to cease operating its business at the Premises shall in no way discharge Tenant from its obligations hereunder, including without limitation its obligation to pay Rental and its maintenance obligations set forth in Article IX hereof.

ARTICLE V
RENTAL AND SECURITY DEPOSIT

SECTION 5.1 Rentals Payable.

Tenant covenants and agrees to pay to Landlord as Rental for the Premises, the following:

(a) The Annual Basic Rental specified in Section 1.1.3, commencing on the Rent Commencement Date; plus

(b) all Additional Rental due from time to time hereunder.

SECTION 5.2 Annual Basic Rental.

Subject to the terms of Section 9.2(c) of this Lease, Annual Basic Rental shall be paid without prior demand in equal monthly installments in advance, commencing on the Rent Commencement Date, and thereafter on the first day of each full calendar month during the Term of this Lease. If the Rent Commencement Date or the Lease Termination date occurs on a date other than on the first or the last day of a calendar month, as applicable, then the first and last

monthly installment of Annual Basic Rental shall be prorated for such fractional calendar month based upon the actual number of days in such month.

SECTION 5.3 Payment of Rental.

For all purposes hereof, payment of Rental payable to Landlord hereunder shall be made and effective when, and not until, the Rental funds are received by Landlord and are in a form readily and immediately available for expenditure by Landlord, including without limitation wire transfer to Landlord’s account or checks payable to Landlord after payment thereon by Tenant’s bank upon which the check is drawn. Tenant shall pay all Rental when due and payable, and, except as provided herein, without any offset, counterclaim, deduction or prior demand therefor. If Tenant shall fail to pay any Rental within five (5) days following the date such payment is due, Tenant shall be obligated to pay a late payment charge (a “Late Fee”) of four percent (4%) of the payment due; provided, however, that if Tenant becomes obligated to pay a Late Fee hereunder, the Late Fee shall be payable on all other Rental payments payable during the same Rental Year if such other Rental payment or payments are not made on the date such other payment or payments are due. In addition, any Rental or other amounts payable hereunder which is not paid within fifteen (15) days after the same is due, including without limitation money advanced by Landlord on behalf of Tenant to pay amounts payable by Tenant hereunder, shall bear interest at the Default Rate from the first day due until paid. Any Additional Rental which shall become due shall be payable, unless otherwise expressly provided herein, shall be paid with the next monthly installment of Annual Basic Rental. Rental and statements required of Tenant shall be paid and delivered to Landlord at its notice address set out in Section 17.1, or at such other place as Landlord may, from time to time, designate in a notice to Tenant. Any payment by Tenant or acceptance by Landlord of a check for a lesser amount than shall be due from Tenant to Landlord shall be treated as a payment on account.

SECTION 5.4 Security Deposit.

A deposit in the amount of $37,000.00 (the “Security Deposit”) shall be paid by Tenant to Landlord together with the first monthly installment of Annual Basic Rental. The Security Deposit shall be held by Landlord as security for the full and faithful performance by Tenant of all the terms, covenants and conditions of this Lease by Tenant to be kept and performed, provided that Tenant shall not be excused from payment of any Rental or any other charge herein provided. If an Event of Default occurs with respect to any provision of this Lease, Landlord may, at its election, use or apply all or any part of the Security Deposit to compensate Landlord for any obligation of Tenant or loss or damage reasonably suffered by Landlord as a result of such Event of Default, including but not limited to, the payment of Rental or other sums due hereunder, the reimbursement of amounts Landlord spends by reason of such Event of Default, and compensation to Landlord for any other loss or damage that Landlord may reasonably suffer by reason of the Event of Default. If any portion is so used or applied, Tenant, upon demand, will deposit with Landlord an amount sufficient to restore the Security Deposit to its original amount. Landlord shall be required to keep the Security Deposit separate from its general funds and shall invest the Security Deposit in a federally insured deposit account or other account approved by Tenant, and Tenant shall be entitled to all interest earned thereon. If Tenant materially performs every provision of this Lease, the Security Deposit or the balance thereof will be returned to Tenant within thirty (30) days after the later of (i) the expiration of this Lease

or any Renewal Terms of this Lease and (ii) delivery of possession of the Premises to Landlord in the condition required under this Lease. In no event will Tenant have the right to apply any part of the Security Deposit to any Rental or other amount payable under this Lease. In the event of sale or transfer of the Premises, if Landlord transfers the Security Deposit to the vendee or transferee, or if such vendee or transferee assumes in writing liability with respect to such Security Deposit, Landlord shall be considered released by Tenant from all liability for the return of such Security Deposit, and Tenant agrees to look solely to such vendee or transferee for the return of the Security Deposit. Tenant agrees that this Section 5.4 shall apply to every transfer or assignment to all subsequent vendees or transferees. The Security Deposit shall not be assigned, transferred or encumbered by Tenant, and any attempt to do so by Tenant shall not be binding upon Landlord.

ARTICLE VI
TAXES

SECTION 6.1 Payment by Lessee.

Subject to the provisions of Section 6.2, in addition to the Annual Basic Rental, Tenant shall pay to the applicable taxing authorities (with a copy or receipt to Landlord), no later than ten (10) days prior to the due date therefor, all real property, personal property and ad valorem taxes and assessments, general and special, water taxes and all other impositions, ordinary and extraordinary of every kind and nature whatsoever, which, during the Term of this Lease, may be levied or assessed against the Premises. Landlord agrees to deliver copies of statements received by Landlord for all of the foregoing to Tenant within ten (10) days following the date Landlord receives such statements from applicable taxing authorities. Tenant shall be responsible for all delinquencies and penalties if the same are incurred because Tenant did not timely remit Taxes to the applicable taxing authorities or because the amount Tenant remitted was insufficient to pay all Taxes. Tenant shall also be solely responsible for and pay within the time provided by law all taxes imposed on its inventory, trade fixtures, apparatus, leasehold improvements (installed by or on behalf of Tenant), equipment and other personal property. All taxes, assessments and other costs to be paid by Tenant pursuant to this Section 6.1 are collectively referred to herein as the “Taxes”; provided, however, “Taxes” shall in no event include (i) any federal, state, or other tax on the income of Landlord, (ii) any franchise, estate, inheritance or similar tax imposed upon Landlord, (iii) any tax, assessment, recording fee, charge, or other levy imposed in connection with the sale or mortgage of the Premises, or any portion thereof or (iv) any increases in ad valorem taxes resulting from an increase in the appraised or assessed value thereof following the sale or conveyance of the Premises to an Affiliate of Landlord. To the extent Tenant fails to pay any of the Taxes when required pursuant to the terms hereof, Landlord shall have the right to do so and upon Landlord’s payment thereof the same, together with interest thereon at the Default Rate, shall become Additional Rental hereunder payable by Tenant on demand by Landlord.

SECTION 6.2 Proration of Taxes.

During the first and last years of the Term, all such taxes and assessments which shall become payable during each of the calendar or fiscal, tax or assessment years, as applicable, shall be ratably adjusted on a per diem basis between Landlord and Tenant in accordance with the respective portions of such calendar, fiscal, tax, or assessment year. To the extent permitted

by applicable law, Tenant may pay any such assessments or taxes in annual installments. In the event any such assessment shall be payable in a lump sum or on an installment basis, Tenant shall have the sole right to elect the basis of payment. If Tenant shall elect to pay any such assessment on the installment basis, then Tenant shall pay only those installments which shall become due and payable during the Term. Any such installments due and payable in the years in which this Lease commences and terminates shall be prorated proportionally.

SECTION 6.3 Taxes on Rental.

In addition to the Taxes payable by Tenant pursuant to Section 6.1 above, Tenant shall pay to the appropriate agency any and all sales, excise and other taxes (not including, however, Landlord’s income taxes) levied, imposed or assessed by the State of North Carolina or any political subdivision thereof or other taxing authority upon any Rental payable hereunder, except to the extent the same are in substitution for income taxes.

SECTION 6.4 Tenant’s Right to Contest Taxes.

Tenant shall have the right to participate in all negotiations of tax assessments. Tenant shall have the right, at Tenant’s cost, to contest the validity or the amount of any tax or assessment levied against the Premises by such appellate or other proceedings as may be appropriate in the jurisdiction, and may defer payment of such obligations, pay same under protest, or take such other steps as Tenant may deem appropriate; provided, however, Tenant hereby agrees (i) to indemnify and hold Landlord harmless from and against any cost, expense or liability arising out of such contest, (ii) to pursue any such contest in good faith and (iii) to post any bond or other security required by applicable law or necessary to protect title to the Premises from the remedies of the taxing authority in connection with such contest. Tenant also agrees to notify Landlord promptly of any such contest and Landlord agrees, at the sole cost of Tenant, to reasonably cooperate in any such contest or proceedings and execute any documents which Landlord may be required to execute in connection with such proceedings. To the extent based on taxes originally paid by Tenant, Tenant shall be entitled to all refunds paid by taxing authorities resulting from any such contest or otherwise paid to Landlord and attributable to the Term.

ARTICLE VII
PREMISES IMPROVEMENTS

SECTION 7.1 Mechanics’ Liens.

No work performed by Tenant pursuant to this Lease, whether in the nature of erection, construction, alteration or repair, shall be deemed to be for the immediate use and benefit of Landlord so that no mechanics’ or other lien shall be allowed against the estate of Landlord by reason of any consent given by Landlord to Tenant to improve the Premises. Tenant shall pay promptly all persons furnishing labor or materials with respect to any work performed by Tenant or its contractors on or about the Premises. [Jim: Please note the following sentence] Prior to the commencement of any work on the Premises, Tenant shall exercise reasonable efforts to obtain unconditional lien waivers from all suppliers of services or materials to the Premises and shall notify in writing all suppliers of services or materials to the Premises that the improvements

to be constructed are solely for the benefit of Tenant, that Landlord shall not be liable for any costs related thereto and that the Premises shall not be subject to any mechanics’ or materialmens’ liens in connection therewith. In the event any mechanics’ or other lien shall at any time be filed against the Premises by reasons of work, labor, services or materials performed or furnished, or alleged to have been performed or furnished, to Tenant or to anyone holding the Premises through or under Tenant, Tenant shall cause the same to be discharged of record or bonded to the satisfaction of Landlord within forty-five (45) days of filing. If Tenant shall fail to cause such lien forthwith to be so discharged or bonded within forty-five (45) days after being notified of the filing thereof, then, in addition to any other right or remedy of Landlord, Landlord may bond or discharge the same by paying the amount claimed to be due, and the amount so paid by Landlord including reasonable attorneys’ fees incurred by Landlord either defending against such lien or in procuring the discharge of such lien, together with interest thereon at the Default Rate, shall be due and payable by Tenant to Landlord as Additional Rental.

SECTION 7.2 Tenant’s Trade Fixtures.

All manufacturing, shipping, warehousing and other trade fixtures, signs, equipment and apparatus owned by Tenant and installed in the Premises by Tenant, at its expense, shall remain the property of Tenant, and Tenant may remove such fixtures and apparatus at any time prior to the expiration of the Term. Notwithstanding the foregoing, Tenant shall repair any damage to the Premises caused by the removal of its personally, inventory, trade fixtures, equipment and apparatus.

SECTION 7.3 Risk of Loss.

Landlord shall bear all risk of loss to the Premises prior to the Turnover Date, except loss caused by Tenant or Tenant’s agents, consultants, contractors, employees, licensees or invitees. In no event shall Tenant be liable to Landlord for any claims for injury to persons or property resulting from or arising out of the Premises prior to the Turnover Date, unless caused by Tenant or Tenant’s agents, consultants, contractors, employees, licensees or invitees.

ARTICLE VIII
OPERATIONS

SECTION 8.1 Operations by Tenant.

Throughout the Term, and in addition to the requirements of Section 9.2(b) below, Tenant will at its expense:

(a) keep the inside and outside of all glass in the doors and windows of the Premises clean;

(b) keep all exterior building surfaces of the Premises clean;

(d) maintain the Premises in a clean, orderly and sanitary condition and free of insects, rodents, vermin and other pests, including cleaning, repairing or replacing all floor covering, if any, within the Premises as needed;

(e) keep any garbage, trash, rubbish or other refuse in containers within the Premises until removed;

(f) have such garbage, trash, rubbish and refuse removed on a timely basis;

(g) keep all mechanical apparatus free of vibration and noise which may be transmitted beyond the Premises;

(h) keep and maintain all landscaping in a neat and orderly condition; and

(i) comply with all laws, ordinances, rules and regulations of governmental authorities applicable to the Premises and all recommendations of any fire and liability insurance rating organization now or hereafter in effect.

SECTION 8.2 Signs and Advertising.

Tenant may modify any existing signs or install new signs used to identify Tenant on the exterior walls of the Premises and/or on the Land, provided Tenant shall be responsible for and repair any damage caused to the Improvements by such modification, installation or the removal of the signs. Tenant will, at its sole cost and expense, maintain all signs and other advertising devices in good condition and repair at all times. Tenant may not install any signs on the roof of the Premises, including the flashing, without the express written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. All signs and other advertising on the exterior of the Premises shall be in compliance with all applicable laws, rules and regulations.

ARTICLE IX
IMPROVEMENT ALLOWANCE; MAINTENANCE AND REPAIRS

SECTION 9.1 Improvement Allowance.

Landlord shall provide to Tenant a tenant improvement allowance (“Allowance”) in the amount of up to Three Hundred Fifty Thousand and No/100 Dollars ($350,000.00) (“Maximum Allowance”), to be used by Tenant to upfit and upgrade the Premises, in Tenant’s discretion, including, but not limited to, floor coverings, painting, lighting and installation of a compressed air system, but excluding any expenditures for Tenant’s equipment, personal property or trade fixtures; except that that Tenant shall be entitled to install and receive reimbursement from the Allowance for trade fixtures, provided that Tenant agrees in writing at the time of disbursement to Tenant of funds from the Allowance for such trade fixture that Landlord, at Landlord’s option, shall be entitled at the expiration or termination of the Lease to elect whether to retain or cause the Tenant to remove such trade fixtures as provided for non-structural alterations in Section 9.3 hereof (collectively, the “Tenant Improvements”). All Tenant Improvements funded with the Allowance shall be completed on or before the end of the twelfth (12th) full calendar month of the Term (“Completion Deadline”). No construction of Tenant Improvements funded with the

Allowance shall occur after the Completion Deadline. The Allowance shall be in the form of an abatement of Basic Annual Rental commencing the thirteenth month of the Term in an amount equal to the Allocated Portion of the Qualified Allowance (each as defined below), which shall be deducted from each of the ensuing monthly payments of Basic Annual Rental until the Qualified Allowance is depleted. The Allocated Portion of the Allowance shall be equal to the amount expended by Tenant for Tenant Improvements completed on or before the Completion Deadline (“Qualified Allowance”) divided by 13. On or before the Completion Deadline, Tenant shall provide to Landlord copies of receipts for all expenditures to be charged against the Allowance, and Landlord shall be entitled to rely on the accuracy of all invoices and fee statements for labor performed or materials furnished in connection with the Tenant Improvements. Tenant shall be solely responsible for payment of that portion of a) the costs of Tenant Improvements that exceed the Maximum Allowance and b) the cost of any Tenant Improvements which are completed after the Completion Deadline. If and to the extent the Tenant Improvements completed during the first Rental Year are less than the Maximum Allowance (the difference between the Maximum Allowance and the cost of the Tenant Improvements completed during the first Rental Year being the “Unused Allowance”), Tenant shall be entitled only to the portion of the Maximum Allowance used during the first Rental Year and shall forfeit and not be entitled to the Unused Allowance. Tenant shall be responsible for coordinating and managing the Tenant Improvements and shall ensure that all Tenant Improvements are performed in a good and workmanlike manner and in accordance with all applicable laws, rules and codes.

SECTION 9.2 Maintenance and Repairs.

(a) To Landlord’s knowledge, as of the Turnover Date and except as disclosed to Tenant in writing, all electrical, mechanical, plumbing, heating, ventilation and air conditioning systems will be in good working order, connected, and providing the services intended. If within ninety (90) days following the Turnover Date Tenant discovers that any of the foregoing systems were not in good working order, connected and providing the services intended as of the Turnover Date, Tenant shall provide written notice thereof to Landlord, and Landlord shall promptly commence and diligently prosecute to completion the repair or replacement of such systems. In addition, Landlord shall: (i) repair or replace when reasonably necessary, the roof of the Building (including without limitation the 1983 section of the roof), (ii) commence within three (3) months after the Turnover Date and diligently prosecute to completion the service of the rooftop HVAC units and mechanical room compressors, including belt and filter replacement, so that each is in good working condition; (iii) on or before the Turnover Date, ensure that all restrooms are in good working condition; and (iv) within six (6) months after the Turnover Date, commence and diligently prosecute to completion the removal of all vegetation from, re-sealing and re-striping of all parking lots and re-painting of all automobile stops yellow. Except as otherwise expressly provided in this Section 9.2 and Sections 10.1, 20.6 and 20.17(d) hereof, Tenant accepts the Premises in their “as is” condition and without warranty of any kind.

During the Term, Landlord will maintain and repair (or replace, if necessary), at its sole cost (except as otherwise provided herein) the roof, load-bearing walls, and foundations of the Premises in a good condition and state of repair, except for casualty and repairs Tenant is obligated to make pursuant to Section 9.2(b). Tenant agrees to reasonably cooperate in the coordination and supervision of such maintenance and repairs and by Landlord. Landlord shall

also be responsible for replacement and overlays of driveways and parking lots. Except as expressly required by this Section 9.2, Landlord shall not be required to furnish any services or facilities or to make any repairs or alterations of any kind in or on the Premises. Except for the repair and maintenance items specified in Section 9.2(a)(i), (ii), (iii) and (iv), it is an express condition precedent to all obligations of Landlord to repair, maintain or replace any portion of the Premises that Tenant notify Landlord in writing of the need for such maintenance, repair or replacement.

(b) The provisions of this Article IX are subject to the provisions of Article XII and Article XIII hereof. At all times during the Term of this Lease, Tenant shall keep and maintain all portions of the Premises in a good condition and state of repair, excepting only ordinary wear and tear, and repairs and replacements Landlord is obligated to make pursuant to Section 9.2(a) hereof. Tenant shall make any and all additions to and all alterations and repairs in, on and about the Premises which may be required by, and shall otherwise observe and comply with, all public laws, ordinances and regulations from time to time applicable to the Premises. Except for the negligence or willful misconduct of Landlord and without limiting the generality of the foregoing, Tenant will (i) keep the interior and exterior of the Premises, together with all electrical, plumbing, heating, ventilating, air-conditioning, and other mechanical systems and installations therein, and all nonload-bearing walls, in good order and repair, including normal and customary preventive maintenance, and, except as required of Landlord pursuant to Section 9.2(a) hereof, will make all replacements from time to time required at its expense, (ii) maintain the grounds around the Improvements, including the mowing of grass, care of shrubs and general landscaping, (iii) notwithstanding anything herein to the contrary, except for Landlord’s repair obligations and normal wear and tear, repair any damage to the roof, load bearing walls and foundations of the Premises, to the driveways and parking lots and to Building Systems (as defined below) caused or permitted by Tenant or its employees, invitees, contractors and agents and (iv) take no action to invalidate any warranty relating to the roof or any other portion of the Improvements.

The cost of maintenance, repairs and replacements to be performed by Tenant pursuant to this Section 9.2(b) shall be borne by Tenant, except that with respect to the maintenance, repair and replacement of any plumbing, HVAC, mechanical, electrical and fire protection systems existing within the Building as of the Turnover Date (“Premises Systems”), Landlord shall bear the costs thereof to the extent such costs exceed a cumulative total of $10,000.00 per Rental Year (“Tenant’s Annual Systems Cost”). Any portion of the Tenant’s Annual Systems Cost not expended during any Rental Year shall be carried over and added to the Tenant’s Annual Systems Cost for subsequent Rental Years (such combined total being the “Tenant’s Total Systems Cost”). In the event the cost of maintenance, repair and replacement of the Premises Systems in any Rental Year exceeds the then-current Tenant’s Total Systems Cost, Landlord shall promptly pay such excess (“Landlord’s Systems Cost”). At the end of each subsequent Rental Year, Tenant shall repay Landlord for such Landlord’s Systems Cost incurred, in an amount not to exceed the unexpended portion of the Tenant’s Total Systems Cost, if any, for such subsequent Rental Year. Any such repayment by Tenant to Landlord of Landlord’s Systems Costs incurred shall be made within fifteen (15) days after the end of each subsequent Rental Year until the earlier of full repayment to Landlord or the expiration of the Term (or Renewal Term, if applicable). If the Term or any Renewal Term expires and Landlord shall not be fully reimbursed, Tenant shall have no further obligation for repayment of any remaining

balance of Landlord’s Systems Costs. Tenant and Landlord each acknowledge that any individual maintenance, repair or replacement of a Premises System, the cost of which is equal to or less than $500.00, shall not be included in the $10,000.00 Tenant’s Annual System Costs.

Tenant shall not be entitled to reimbursement from Landlord for maintenance, repair or replacement of a Premises System unless such maintenance, repair or replacement is reasonably necessary and in accordance with prudent and reasonable commercial standards to maintain such systems in good working condition (“Qualified Maintenance”). For any maintenance, repair or replacement to any Premises Systems which Tenant intends to include in the $10,000.00 Tenant’s Annual System Costs, Tenant shall deliver to Landlord written notice thereof, together with a reasonably detailed description (or plans and specifications, if available) of such maintenance, repairs or replacements. Landlord shall have twenty (20) days following the date of receipt of such notice and description (or plans and specifications) to notify Tenant in writing whether Landlord agrees that the proposed maintenance, repair or replacement constitutes Qualified Maintenance. If Landlord fails to timely provide such notice, the improvements shall be deemed Qualified Maintenance. If Landlord timely objects to all or any portion of the maintenance, repair or replacement as being Qualified Maintenance (“Disapproval Notice”), and if Landlord and Tenant cannot agree within ten (10) days after receipt by Tenant of the Disapproval Notice regarding whether the improvements constitute Qualified Maintenance, Tenant shall be entitled, within ninety (90) days after the expiration of such (10) day period, to commence arbitration to determine whether the maintenance, repairs or replacement constitutes Qualified Maintenance. The arbitration shall be conducted under the Commercial Arbitration Rules of the American Arbitration Association.

(c) Tenant will surrender the Premises at the expiration of the Term or at such other time as it may vacate the Premises in as good condition as when received, excepting only ordinary wear and tear, damage by insured casualty and repairs and replacements Landlord is obligated to make pursuant hereto. In the event Tenant fails to perform its maintenance and repair obligations as set forth in Section 9.2(b), Landlord may, but shall not be obligated to, after providing Tenant with thirty (30) days written notice and the right to cure, do so and the cost of same shall be Additional Rental payable to Landlord within thirty (30) days following demand therefor.

(d) Within thirty (30) days following receipt of notice from Tenant to Landlord under Section 9.2(a) that maintenance or repair by Landlord is required, Landlord shall either commence the maintenance, repair or replacement or shall notify Tenant of Landlord’s objections thereto (“Objection Notice”). If Tenant disagrees with Landlord’s objections, Tenant shall notify Landlord in writing within ten (10) days after receipt of Landlord’s objections (“Disagreement Notice”). If Tenant shall fail to timely provide the Disagreement Notice, Landlord shall not be obligated to perform any of the repair, maintenance or replacement items objected to by Landlord and all such maintenance, repair, or replacement items shall be performed by Tenant at Tenant’s cost. If Tenant timely provides the Disagreement Notice and if Tenant and Landlord cannot resolve any such disagreement within fifteen (15) days after receipt by Landlord of Tenant’s Disagreement Notice (“Resolution Period”), Tenant shall be entitled, within fifteen (15) days after the Resolution Period, to commence arbitration to determine whether Landlord is obligated to perform such maintenance, repair or replacement under the terms of this Lease. The arbitration shall be conducted under the commercial arbitration rules of

the American Arbitration Association. If the arbitrator shall determine that Landlord is obligated under the Lease to perform such maintenance, repairs or replacement, Landlord at Landlord’s cost shall promptly commence and diligently prosecute to completion any maintenance, repairs or replacement determined by the arbitrator to be the responsibility of Landlord. Any maintenance, repairs or replacement determined by the arbitrator not to be the responsibility of Landlord under this Lease shall be promptly commenced and diligently prosecuted to completion by Tenant, the cost of which shall be paid by Tenant. If the arbitrator shall determine that all or a portion of the maintenance, repairs or replacement is to be performed by Landlord and Landlord shall fail to perform such maintenance, repairs or replacement as required herein, Tenant shall be entitled to perform such maintenance, repairs or replacement and Landlord shall be obligated to pay Tenant’s reasonable out-of-pocket costs of such maintenance, repairs or replacement within thirty (30) after receipt of an invoice therefore. Failure of Landlord to reimburse Tenant within such thirty (30) day period shall entitle Tenant to withhold all future Rental coming due until the cost of such maintenance, repairs or placement shall be paid in full, together with interest at the Default Rate from the date of expenditure. Notwithstanding anything to the contrary herein, in the event the need for such maintenance, repairs or replacement constitutes an imminent threat of harm to persons or damage to property, then Tenant may perform the same if Landlord has not commenced and diligently prosecuted to completion such maintenance, repair or replacement in time to prevent to such harm or damage. Thereafter, if Tenant believes such maintenance, repairs or replacement is the responsibility of Landlord, Tenant shall so notify Landlord, and the objection, arbitration and setoff provisions provided for above shall apply.

SECTION 9.3 Alterations.

Tenant will not make any alterations, renovations, improvements or other installations in, on or to the Premises or any part thereof that would alter or change any of the structural components or aspects of the Premises (“Structural Alterations”) without Landlord’s prior written approval thereof, which approval Landlord will not unreasonably withhold, condition or delay; provided, however, that Landlord may condition Landlord’s approval on Tenant’s agreement that Tenant, at the expiration or termination of this Lease, at Tenant’s cost, remove all Structural Alterations, repair all damage to the Premises caused by the installation or removal of such Structural Alteration and restore all structural components removed by Tenant. Tenant shall have the right to make any other alterations without obtaining the consent of Landlord but shall make them in a good and workmanlike manner in accordance with all applicable laws, rules and codes and all other valid requirements of appropriate governmental authorities. Unless Landlord at the time of approval shall require removal thereof, all Structural Alterations shall become a part of the Improvements and the property of Landlord upon expiration or other termination of this Lease. All non-structural alterations to the Premises shall become the property of Landlord at the expiration or other termination of the Lease; provided, however, that Landlord at Landlord’s option may require Tenant at Tenant’s cost to remove some or all non-structural alterations and to restore and repair any damage caused by such removal. Upon Tenant’s written request at any time not more than six (6) months before the expiration of the Term, Landlord shall notify Tenant in writing of whether Landlord elects to cause the removal by Tenant of some or all of Tenant’s non-structural alterations.

SECTION 9.4 Tenant Liens.

Tenant will not permit the Premises to become subject to any mechanics’, laborers’ or materialmen’s lien on account of labor or material furnished to or requested by Tenant or Tenant’s contractor’s agents or employees or claimed to have been furnished to Tenant or Tenant’s contractor’s agents or employees in connection with work of any character performed or claimed to have been performed on the Premises, by or at the direction or sufferance of Tenant and will cause all such liens to be removed as provided in Section 7.1 hereof.

ARTICLE X
UTILITIES

SECTION 10.1 Water, Gas, Electricity, Telephone, and Sanitary Sewer.

To Landlord’s knowledge, at the Turnover Date and except as disclosed to Tenant in writing, the facilities necessary to enable Tenant to obtain water, gas, electricity, telephone and sanitary sewer service for the Premises will be in good working condition. Tenant shall not at any time overburden or exceed the capacity of the mains, feeders, ducts, conduits or other facilities by which such utilities are supplied to, distributed in or serve the Premises. Subject to obtaining Landlord’s prior written approval (which shall not be unreasonably withheld, conditioned or delayed), Tenant may, at its expense, install any additional utility facilities, which facilities shall, at Landlord’s option become Landlord’s property or removed at the expiration or other termination of the Lease as provided in Section 9.3 relating to non-structural alterations. Tenant shall be solely responsible for and promptly pay, as and when the same become due and payable, all charges for water, sanitary sewer, gas, electricity, telephone and any other utility used or consumed in the Premises during the Term.

ARTICLE XI
INSURANCE; INDEMNIFICATION

SECTION 11.1 Indemnity by Tenant.

Tenant shall indemnify, hold harmless and defend Landlord from and against, and Tenant waives against Landlord all claims for, any and all claims, actions, damages, liability and expense, including, but not limited to reasonable attorneys’ and other professional fees actually incurred, in connection with or caused by any breach or default by Tenant hereunder or arising from or out of any use, occupancy, operation, management, control or activity on or involving the Premises during the Term (other than claims or liabilities that result from Landlord’s negligence or willful misconduct), whether in tort or in contract, by any criminal activity on or about the Premises or otherwise. The provisions of this paragraph are subject to the provisions of Article XII and Article XIII of this Lease and shall survive the expiration or other termination of this Lease.

SECTION 11.2 Tenant’s Insurance.

Tenant shall procure and maintain, and pay all premiums, fees and charges and deductibles for the purpose of procuring and maintaining continuously throughout the Term subsequent to the Turnover Date:

(a) insurance on the Improvements and Tenant’s personal property and inventory located in the Premises against loss or damage by fire or other casualty, with endorsements providing what is commonly known as “all-risk” fire and extended coverage, vandalism and malicious mischief insurance, in an amount equal to the full replacement cost thereof, with a deductible of no greater than Fifty Thousand and No/100 Dollars ($50,000.00). Tenant shall maintain insurance coverage adequate to prevent Tenant from becoming a co-insurer of the Improvements;

(b) combined single limit general liability insurance, including, but not limited to, insurance against assumed or contractual liability under this Lease, with respect to the Premises, to afford protection with limits, for each occurrence, of not less than Two Million and No/100 Dollars ($2,000,000.00) with respect to personal injury or death, and One Million and No/100 Dollars ($1,000,000.00) with respect to property damage; and

(c) Tenant shall require any contractor performing work on the Premises to carry and maintain, at no expense to Landlord, worker’s compensation insurance as required by statute.

SECTION 11.3 Tenant’s Insurance Policies.

All liability, casualty and other insurance and policies of insurance referred to in Section 11.2 shall include Landlord and Landlord’s Mortgagee, if any, as additional insureds and loss payees (other than as relates to Tenant’s personal property, equipment and inventory located at the Premises), shall insure Landlord against liability arising out of Tenant’s negligence or the negligence of any other person, firm or corporation and shall cover any liability of Tenant that may arise through any indemnity given by Tenant in this Lease. All policies procured hereunder shall be under standard form policies issued by insurers of recognized responsibility, rated A-XII or better by Best’s Insurance Rating Service and with carriers qualified to do business in North Carolina. Evidence of such insurance, together with copies of all insurance policies required hereunder, shall be delivered to Landlord prior to the Turnover Date, and thereafter not less than thirty (30) days prior to the expiration thereof, and shall provide that such policy may not be canceled or modified except upon not less than thirty (30) days prior written notice to Landlord. If Tenant fails to procure and maintain the insurance required by this Article XI, in addition to all other remedies of Landlord, Landlord shall have the right to do so, without notice to Tenant if Landlord discovers that insurance coverage has lapsed, and the cost of same shall be Additional Rental payable to Landlord hereunder within thirty (30) days of demand therefore with interest thereon at the Default Rate. Tenant will deliver certificates of all insurance required hereunder to Landlord before the Turnover Date and thereafter throughout the Term at least thirty (30) days prior to expiration of each such policy. Landlord shall have the right from time to time, but not more often than once in any three year period to require reasonable increases in the coverages of insurance hereunder.

SECTION 11.4 Waiver of Subrogation.

Tenant hereby waives any and all rights of recovery, claim, action or cause of action against Landlord, its agents, employees, officers, partners, servants, shareholders, members or

managers for any loss or damage that may occur to the Premises or any personal property located therein arising by reason of fire, the elements or any cause which could be insured against under the terms of a standard “all-risk” fire and extended coverage insurance policy, regardless of cause or origin. Landlord hereby waives any and all rights of recovery, claim, action or cause of action against Tenant, its agents, employees, officers, partners, servants, shareholders, members or managers for any loss or damage that may occur to the Premises or any personal property located therein arising by reason of fire, the elements or any cause to the extent insured against under the terms of the “all-risk” fire and extended coverage insurance policy obtained by Tenant, regardless of cause or origin. Tenant agrees to have the insurance policies obtained pursuant to this Lease endorsed to effect the terms of this Section 11.4 and shall forward copies of the same to Landlord.

SECTION 11.5 Insurance Proceeds.

All insurance proceeds or awards payable under any casualty or rental loss insurance (except insurance proceeds for damage to Tenant’s trade fixtures, equipment and personal property) shall be payable solely to Landlord, and Tenant shall have no interest therein.

ARTICLE XII
DAMAGE AND DESTRUCTION

SECTION 12.1 Landlord’s Repair upon Casualty.

(a) If, during the Term of this Lease, the Improvements shall be damaged or destroyed by fire or other casualty, then Tenant shall, subject to the provisions hereof, repair and restore the Improvements. All such repair and restoration of the Premises shall be in accordance with the disbursement terms and conditions (including plan approval) imposed by Landlord’s Mortgagee, if any. If no Event of Default by Tenant exists and if, within the later to occur of (i) sixty (60) days after the date insurance proceeds are received by Landlord or Landlord’s Mortgagee and (ii) one hundred twenty (120) days after the date of any such casualty, Landlord’s Mortgagee fails to make insurance proceeds available under the terms of the mortgage documents between Landlord and Landlord’s Mortgagee, and Landlord does not elect within twenty (20) days thereafter to pay for the repair or restoration of the Improvements, then this Lease shall automatically terminate effective as of the date of casualty and neither party shall have any further obligations hereunder. Notwithstanding anything to the contrary contained in this Lease, if the Premises are damaged or destroyed in the last six (6) months of the Term, unless Tenant elects, or has elected, to extend the Term for the next Renewal Term, either Tenant or Landlord may elect to terminate this Lease by written notice to the other, which notice shall be given on or before the date that is thirty (30) days after such damage or destruction.

(b) Notwithstanding the provisions of Section 12.1(a), if insurance proceeds are unavailable because of Tenant’s failure to maintain insurance pursuant to the terms hereof, default by Tenant hereunder or Tenant’s use of the Premises, then Tenant shall have no right to terminate this Lease and Tenant shall repair or restore the Premises at its cost and expense. Tenant acknowledges that Landlord and Landlord’s Mortgagee, if any, shall have the right to review and approve all plans and specifications for the Improvements to be repaired or restored pursuant to the terms hereof, and may impose such requirements as are reasonable and

customary for construction of that type in Mecklenburg County, North Carolina. Landlord or Landlord’s Mortgagee shall be entitled to hold all insurance proceeds and disburse such proceeds pursuant to reasonable construction disbursement procedures. Unless otherwise agreed by the parties hereto, to the extent possible and practical, the Improvements shall be rebuilt and restored as nearly as possible to the specifications existing immediately prior to the casualty, with such changes therein as are necessitated by Landlord’s Mortgagee, if any, or applicable governmental rules and regulations in a good and workmanlike manner and in accordance with applicable laws, rules and codes. To the extent the cost of rebuilding or restoration exceeds the amount of insurance proceeds received and Tenant is obligated to rebuild and restore pursuant to the provisions of this Section 12.1 (or agrees with Landlord to rebuild and restore), then Tenant shall contribute the difference. Landlord shall cooperate with Tenant in connection with any repair and restoration of the Premises and the same shall be completed with due diligence and commenced and completed within a reasonable time after the damage or loss occurs. Annual Basic Rental and all other Rental hereunder shall not abate while the Improvements are being repaired or restored, unless Tenant has procured rent loss insurance reasonably acceptable to Landlord and such insurance pays the Rental that otherwise would be paid by Tenant hereunder, and in that event Rental hereunder shall abate only to the extent of insurance proceeds received by Landlord.

(c) In the event the Improvements cannot be rebuilt, restored or repaired because of prohibitions contained in then applicable zoning or other governmental rules and regulations, then all proceeds payable on account of such casualty shall be paid to the parties and Landlord’s Mortgagee, as their respective interests appear, this Lease shall terminate as of the date of casualty, and neither party shall have any further right or obligation to the other hereunder except as otherwise provided herein.

ARTICLE XIII
CONDEMNATION

SECTION 13.1 Termination of Lease.

In the event all or any portion of the Premises shall be acquired for any public or quasi-public use through taking by condemnation, eminent domain or any similar proceeding, or purchase in lieu thereof (a “Taking”), such that Tenant determines in its reasonable discretion that the Premises cannot continue to be operated for its then current use with reasonably sufficient parking and vehicular access and in a commercially reasonable manner, then the Term shall cease and terminate as of the date the condemning authority takes title or possession to the affected portion of the Property, whichever first occurs.

SECTION 13.2 Continuation of Lease.

If Tenant reasonably determines after a Taking that the Premises can continue to be operated for its then current use with sufficient parking, then this Lease shall remain in full force and effect in accordance with its terms, except that the Annual Basic Rent shall be, in the case where any portion of the Improvements has been taken, equitably reduced.

SECTION 13.3 Apportionment of Award.

In the event of any Taking, whether whole or partial, Landlord shall be entitled to receive the entire award for the Taking of the Land and any Improvements, and Tenant shall be entitled to receive any specific allocation for Tenant’s personal property and equipment, loss, disruption and relocation of Tenant’s business and for the value of Tenant’s leasehold estate excluding any Renewal Terms; provided, however, that if the total award for any Taking (excluding any award for Tenants personal property, equipment and disruption and relocation of Tenant’s business) is less than $100,000.00, Landlord shall be entitled to all of such award. The provisions of this Section 13.3 shall survive any termination of this Lease.

ARTICLE XIV
ASSIGNMENT AND SUBLEASING

SECTION 14.1 Landlord’s Consent.

Tenant may not sublet the Premises, assign its interest in this Lease nor mortgage its interest in the Lease (each a “Transfer”) without the prior consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, however, Tenant may sublet the Premises or assign its interest in this Lease to an Affiliate or to any person acquiring all, or substantially all, operating assets of Tenant without Landlord’s consent. No assignment, subletting or hypothecation of any interest in this Lease shall release Tenant from its liability under this Lease, which shall continue as primary joint and several liability with Tenant’s assignee, subtenant or other transferee and not as a surety or guarantor. Each assignee shall assume jointly and severally with Tenant all obligations of Tenant hereunder, which assumption shall be in form and content reasonably acceptable to Landlord and delivered to Landlord concurrent with, and as a condition to, such assignment. Tenant shall be entitled to keep any and all sublease or assignment profits. Tenant shall only be entitled to mortgage or otherwise pledge or assign as security (each a “Mortgage”) Tenant’s interest in this Lease pursuant to a first priority Mortgage, securing a loan to Tenant from an institutional lender with a payment term not longer than the remaining Lease Term, securing only Tenant’s interest in the leasehold and/or Tenant’s personal property. No mortgage by Tenant shall i) encumber any of Landlord’s right, title or interest in this Lease or the Premises, ii) modify or amend this Lease or iii) otherwise affect Landlord’s right hereunder.

SECTION 14.2 Transfer of Interest.

If Tenant is a corporation, partnership or other business entity, the merger or consolidation of Tenant with any other entity, the issuance of any additional stock or ownership interest, the conversion or change of Tenant from one type of business entity to another, and/or the transfer, assignment or hypothecation of any stock or ownership interest in such entity in the aggregate in excess of twenty-five percent (25%) of such interests to a party other than an Affiliate of Tenant, as Tenant may be constituted as of the date of this Lease, whether directly or indirectly, shall be deemed to be a Transfer within the meaning of this Section 14.

ARTICLE XV
DEFAULT

SECTION 15.1 “Event of Default” Defined.

Any one or more of the following events shall constitute an “Event of Default”:

(a) Any attachment or execution on all or any portion of the Premises or similar legal process not released within sixty (60) days; or if Tenant is adjudicated as bankrupt or insolvent under any State bankruptcy or insolvency law or an order for relief is entered against Tenant under the Federal Bankruptcy Code and such adjudication or order is not vacated within sixty (60) days.

(b) The commencement of a case under any chapter of the Federal Bankruptcy Code by or against Tenant or the filing of a voluntary or involuntary petition proposing the adjudication of Tenant as bankrupt or insolvent, or the reorganization of Tenant, or an arrangement by Tenant with its creditors, unless the petition is filed or case commenced by a party other than Tenant and is withdrawn or dismissed within sixty (60) days after the date of the filing.

(d) The appointment of a receiver or trustee for the business or property of Tenant unless such appointment shall be vacated within sixty (60) days of its entry.

(e) The making by Tenant of a general assignment for the benefit of its creditors, or, except as permitted pursuant to Section 14.1, if in any other manner Tenant’s interest in this Lease shall pass to another by operation of law.

(f) The failure of Tenant to pay any Rental or other sum of money within fifteen (15) days after the same is due.

(g) Default by Tenant in the performance or observance of any covenant or agreement of this Lease (other than a default involving the payment of money), which default is not cured within thirty (30) days after the giving of notice thereof by Landlord, unless such default is of such nature that it cannot be cured within such thirty (30) day period, in which case no Event of Default shall occur so long as Tenant shall commence the curing of the default within such thirty (30) day period and shall thereafter diligently prosecute the curing of same.

SECTION 15.2 Remedies.

Upon the occurrence and during the continuance of any Event of Default, Landlord, without notice to Tenant in any instance, may do any one or more of the following:

(a) Perform, on behalf and at the expense of Tenant, any obligation of Tenant under this Lease which Tenant has failed to perform and of which Landlord shall have given Tenant notice, the cost of which performance by Landlord, together with interest

thereon at the Default Rate from the date of such expenditure, shall be deemed Additional Rental and shall be payable by Tenant to Landlord within ten (10) days after demand therefor;

(b) Terminate this Lease and, pursuant to summary process, reenter an repossess the Premises and remove Tenant and each and every occupant therein and all of Tenant’s personalty, trade fixtures and apparatus and be entitled to recover as damages a sum of money equal to the sum of (i) the cost of recovering the Premises, (ii) all accrued and unpaid Rental, together with interest thereon at the Default Rate and (iii) all other damages incurred by Landlord and available hereunder or at law or equity.

(c) Without terminating this Lease, terminate Tenant’s right of possession to the Premises, and, pursuant to summary process, reenter and repossess the Premises and remove Tenant and each and every occupant therein and all of Tenant’s personalty, trade fixtures and apparatus. In the event of reentry by Landlord, Tenant shall be liable to Landlord for losses actually sustained, including, but not limited to, the cost of cleaning the Premises and the costs of preparing the same for reletting to other tenants incurred reasonably and in good faith, and including reasonable attorneys’ fees actually incurred. No reentry by Landlord, however, or any other action by Landlord shall constitute an acceptance of surrender by Tenant, it being understood that such acceptance or surrender can be affected only by the written agreement of Landlord and Tenant; and

(d) Without limiting the foregoing, exercise any legal or equitable right or remedy which it may have under this Lease or at law or equity.

Notwithstanding the provisions of clause (a) above and regardless of whether an Event of Default shall have occurred, Landlord may exercise the remedy described in clause (a) without any notice to Tenant if Landlord, in its reasonable, good faith judgment, believes it would be irreparably injured by failure to take rapid action or if Landlord reasonably believes that the unperformed obligation or pending actions by Tenant will result in immediate and substantial harm to person or property. Notwithstanding anything in this Lease to the contrary, Landlord shall not have the right to place liens or encumbrances on Tenant’s personal property and fixtures, and Landlord hereby waives any and all liens and encumbrances against Tenant’s personal property and fixtures. Landlord further agrees, upon request of Tenant, to execute a customary landlord’s waiver and consent for the benefit of Tenant and any lender of Tenant.

Any costs and expenses incurred by either party (including, without limitation, reasonable attorneys’ fees actually incurred) in enforcing any of its rights or remedies under this Lease shall, in the case of sums due Landlord, be deemed Additional Rental and shall, in all cases, be repaid to the party entitled to the same within ten (10) days of demand therefor and shall bear interest from the date due until paid at the Default Rate.

SECTION 15.3 Damages.

(a) If Tenant’s right of possession under this Lease is terminated by Landlord pursuant to Section 15.2, Tenant shall remain liable for any Rental and its other obligations under this Lease. Tenant shall also pay to Landlord, together with interest thereon at the Default

Rate, (i) all reasonable costs, fees and expenses including, but not limited to, reasonable attorneys’ fees actually incurred, costs and expenses incurred by Landlord in pursuit of its remedies hereunder, or in reletting the Premises to others from time to time and (ii) additional damages, which shall be in an amount or amounts equal to the Rental due hereunder during the remainder of the Term, less all sums received by Landlord from any reletting of the Premises and iii) all other damages incurred by Landlord and available at law or equity.

(b) If Tenant’s right of possession under this Lease is terminated pursuant to Section 15.2, Landlord shall use commercially reasonable efforts to relet the Premises or any part thereof, alone or together with other premises, for such term or terms (which may be greater or less than the period which otherwise would have constituted the balance of the Term) and on such terms and conditions as Landlord may reasonably determine are appropriate in the then-current rental market.

SECTION 15.4 Assignment in Bankruptcy.

In the event of an assignment by operation of law under the Federal Bankruptcy Code, or any State bankruptcy or insolvency law and Landlord elects not to terminate or is stayed from termination of Tenant’s rights of possession under this Lease, the assignee shall provide Landlord with adequate assurance of future performance of all of the terms, conditions and covenants of the Lease, which shall include, but which shall not be limited to, assumption of all the terms, covenants and conditions of the Lease by the assignee and the making by the assignee of the following express covenants to Landlord:

(a) That assignee has sufficient capital and financial viability to pay the Rental and other charges due under the Lease for the entire Term; and

(b) That assumption of the Lease by the assignee will not cause Landlord to be in violation or breach of any provision in any financing agreement.

ARTICLE XVI
SUBORDINATION AND ATTORNMENT

SECTION 16.1 Subordination.

(a) Unless a Mortgagee shall otherwise elect as provided in Section 16.2 of this Lease, and subject to Tenant’s right of non-disturbance set forth in Section 16.4 below, Tenant’s rights under this Lease are and shall remain subject and subordinate to the operation and effect of any mortgage, deed of trust or other security instrument constituting a lien upon the Premises, whether the same shall be in existence at the date hereof or created hereafter, any such mortgage, deed of trust or other security instrument being referred to herein as a “Mortgage” and the party or parties having the benefit of the same, whether as mortgagee, trustee or note holder, being referred to herein as a “Mortgagee”.

(b) Tenant agrees, within ten (10) business days after a request therefor, to execute any instrument or instruments reasonably necessary or desirable to effectuate its agreement to subordinate its interest to the interest of any Mortgagee, proved that such subordination shall be subject to the non-disturbance requirements described in Sections 16.3 and 16.4 below.

SECTION 16.2 Mortgagee’s Unilateral Subordination.

If a Mortgagee shall elect by notice to Tenant or by the recording of a unilateral declaration of subordination, then this Lease and Tenant’s rights hereunder shall be superior and prior in right to the Mortgage of which such Mortgagee has the benefit, with the same force and effect as if this Lease had been executed, delivered and recorded prior to the execution, delivery and recording of such Mortgage.

SECTION 16.3 Attornment.

If any person shall succeed to all or part of Landlord’s interest in the Premises, whether by purchase, refinance, foreclosure, deed in lieu of foreclosure, power of sale, termination of lease, or otherwise, such successor in interest shall not disturb Tenant’s interest in or possession of the Premises pursuant to the terms of this Lease, Tenant shall attorn to such successor in interest and shall, within ten (10) business days after a request therefor, execute such agreement in confirmation of such attornment as such successor in interest shall reasonably request; provided, however, that no Mortgagee or successor in interest to Landlord by reason of foreclosure or deed in lieu of foreclosure shall be (i) bound by any payment of Rental more than one (1) month in advance; (ii) bound by any amendments or modifications of this Lease made after the date of such Mortgage without the consent of the Mortgagee or (iii) liable for any act or omission of a prior landlord hereunder unless and to the extent such act or omission shall be continuing in nature and shall have continued after the date of foreclosure or deed in lieu of foreclosure.

SECTION 16.4 Non-Disturbance.

So long as no Event of Default shall exist, this Lease shall remain in full force and effect for the full Term hereof, and Tenant’s occupancy of the Premises and tenancy under this Lease shall not be disturbed by any foreclosure proceeding, by any deed in lieu of foreclosure or other such transfer, or by any breach or termination of the ground lease or other agreement by and between (Olds and La Gatta (or any other parties comprising Landlord), and any subordination set forth in Section 16.1 is made subject to Tenant’s non-disturbance rights under this Section 16.4. Landlord shall exercise diligent, good faith efforts to cause any current or future Mortgagee to execute and deliver a subordination, non-disturbance and attornment agreement, in form and substance reasonably acceptable to all parties, as soon as reasonably possible after the execution hereof.

ARTICLE XVII
NOTICES

SECTION 17.1 Sending of Notices.

All notices and communications hereunder shall be in writing and shall be deemed given: (a) on the date of delivery if delivered in person; (b) on the date placed with a nationally recognized overnight delivery service, such as Federal Express; (c) on the date deposited in the United States mail if sent by registered or certified mail, postage prepaid; or (d) on the date sent by electronically-confirmed facsimile transmission. All such notices and communication shall be properly addressed as follows:

If to Landlord:		Olds Properties Corporation
		c/o Olds Securities
		Attn: Helene Funk
		150 East 57th Street, Suite 16-E
		New York, New York 10022
		Facsimile: (212) 832-1665

and to:		John H.O. La Gatta
		50 West Liberty Street, Suite 1080
		Reno, Nevada 89501
		Facsimile: (775) 785-2245

with a copy to:		Lionel Sawyer & Collins
		Attn: Gary Duhon, Esq. and Craig Etem, Esq.
		1100 Bank of America Plaza
		50 West Liberty Street
		Reno, Nevada 89501
		Facsimile: (775) 788-8682

If to Tenant:		Warner Electric Company
		Attn: General Counsel
		997 Lenox Drive, Suite 111
		Lawrenceville, New Jersey 08648
		Facsimile: (609) 896-7633

with a copy to:		Moore & Van Allen PLLC
		Attn: Bryan P. Durrett, Esq.
		100 North Tryon Street, Floor 47
		Charlotte, North Carolina 28202-4003
		Facsimile: (704) 339-5843

If sent by one of the herein-described means, notices shall be deemed received: (w) on the date delivered if given by personal delivery; (x) one (1) business day after being placed with a nationally recognized overnight delivery service; (y) three (3) business days after being deposited in the United States mail service; or (z) on the following business day if sent by electronically-confirmed facsimile transmission.

Either party may at any time change its notice address (including its facsimile number) by sending a written notice to that effect by one of the above-described means to the other party stating the change and setting forth the new address or number.

ARTICLE XVIII
QUIET ENJOYMENT

SECTION 18.1 Warranty.

Subject only to applicable laws (including zoning laws), Landlord warrants that it has full right and authority to lease the Premises upon the terms and conditions herein set forth; and Tenant, upon paying the Rental and upon Tenant’s performance of all of the terms, covenants and conditions of this Lease on its part to be kept and performed, may quietly have, hold and enjoy the Premises during the Term of this Lease without disturbance from Landlord or from any other person claiming through Landlord.

ARTICLE XIX
RIGHT OF FIRST OFFER AND RIGHT OF FIRST REFUSAL

SECTION 19.1 Right of First Offer.

If at any time during the Term, Landlord desires to market for sale or transfer any or all of the Premises other than to an Affiliate, Landlord shall first provide written notice to Tenant of its intention to do so, which notice shall constitute an offer of purchase and sale for the Premises, or portion thereof, to Tenant (the “First Offer Notice”). The First Offer Notice shall contain the terms and conditions upon which Landlord intends to offer the Premises for sale or assign its interest therein, including purchase price, closing date (which shall not be earlier than forty five (45) days after acceptance) and other material business terms. Upon receipt of the First Offer Notice, Tenant shall have thirty (30) business days (the “Acceptance Period”) to determine whether the terms and conditions contained therein are acceptable to Tenant and to accept the offer of purchase and sale or to negotiate an agreement with Landlord for the purchase and sale of the Premises upon such other terms and conditions as are acceptable to the parties. If the terms and conditions contained in the First Offer Notice are acceptable to Tenant, Tenant shall so indicate by providing written notice thereof to Landlord prior to expiration of the Acceptance Period. In the event the terms and conditions contained in the First Offer Notice are unacceptable to Tenant, and Landlord and Tenant are unable to reach agreement on other terms and conditions acceptable to both parties prior to expiration of the Acceptance Period, Landlord shall be free to market and sell or transfer the Premises to other persons for a purchase price not less than the purchase price set forth in the First Offer Notice and on other terms not materially more favorable to the purchaser than those set forth in the First Offer Notice. In the event Landlord does not consummate a sale or other transfer of the Premises in accordance with the terms of the First Offer Notice within one (1) year following the date of such First Offer Notice, Landlord shall again be obligated to provide a new First Offer Notice to Tenant pursuant to this Section 19.1 prior to Landlord continuing (or again, if applicable) seeking, soliciting or entertaining any offer to purchase, sell or transfer all or any portion of the Premises other than to an Affiliate. If Landlord does consummate a sale or other transfer of the Premises in accordance with the terms of the First Offer Notice, or to an Affiliate, such sale or transfer shall be subject to the terms and provisions of this Lease; provided, however, upon consummation of a bona fide, arms’ length sale or transfer of the Premises to a party other than an Affiliate, Tenant’s rights pursuant to this Section 19.1 shall no longer apply with respect to any subsequent offers to purchase, sell or transfer all or any portion of the Premises by the then-owner of the Premises.

In addition to the assignment by Landlord of its interest in the Premises to a third party, the following event shall also constitute an assignment which subjects the Improvements to the terms of this Section 19.1 and for which a First Offer Notice is required: part or all of the ownership interests in any entity to which La Gatta shall convey title to the Improvements shall in any one or more instances be issued, or transferred by sale, assignment, conveyance, operation of law (including, but not limited to, transfer as a result of or in conjunction with any merger, reorganization or recapitalization) or other disposition, or otherwise changed, so as to result in less than fifty-one percent (51%) of such ownership interests being owned individually or collectively by La Gatta and/or an Affiliate of La Gatta.

SECTION 19.2 Right of First Refusal.

In the event Landlord desires to sell the Premises at any time during the Term other than to an Affiliate, except for any sale or transfer to third parties by Landlord allowed under Section 19.1, Tenant shall have a right of first refusal to acquire the Premises for the purchase price and on substantially the same other reasonable terms and conditions as contained in any bona fide offer (an “Offer”) to purchase the Premises. Landlord shall promptly notify Tenant upon receipt of an Offer, which notification shall contain a true and complete copy of the Offer. Tenant may exercise such right by providing Landlord with written notice of its intent to acquire the Premises within thirty (30) business days after Tenant’s receipt of the notification and copy of the Offer. In the event Tenant fails to exercise its right of first refusal within such thirty (30) business day period, Landlord shall be free to sell the Premises in accordance with the terms and conditions of the Offer. Notwithstanding the sale of the Premises, the Right of First Offer described in Section 19.1 above shall survive the closing of such sale, and Tenant shall retain the Right of First Offer to acquire the Premises for the Term of the Lease. For purposes of this Section 19.2, a bona fide offer shall mean a legitimate, written offer containing terms and conditions acceptable to Landlord from a prospective buyer that is ready, willing and able to acquire the Premises on such terms and conditions.

ARTICLE XX
MISCELLANEOUS

SECTION 20.1 Estoppel Certificates.

At any time and from time to time, within ten (10) days after request therefor from the other party, Landlord or Tenant will execute, acknowledge and deliver to the other, and to such Mortgagee, buyer or other third party as may be designated in the request, a certificate in reasonable form with respect to the matters relating to this Lease or the status of performance of obligations of the parties hereunder as may be reasonably requested.

SECTION 20.2 Inspections and Access by Landlord.

So long as Landlord does not unreasonably interfere with Tenant’s operations, Tenant will permit Landlord, its agents, employees, contractors, lenders, buyers and tenants (subject to the condition below) to enter the Premises upon not less than 24 hours prior written notice, and then only during Tenant’s normal business hours, to inspect the same, to post notices of non-responsibility, and to enforce or carry out any provision of this Lease, including, without

limitation, any access necessary for the making of any repairs and other reasonable business purposes; provided that, i) in an emergency situation, such access shall be at any time upon Landlord’s oral request, and ii) Landlord shall be entitled to show the Premises to prospective tenants only during the last twelve (12) months of the Term and any Renewal Terms, of which showings Landlord shall provide Tenant at least three (3) days prior written notice, which notice shall identify the prospective tenant, and during which showings Tenant shall be entitled to have a representative in attendance, and iii) showing to prospective buyers during the last twelve (12) months of the Term and any Renewal Terms shall require at least three (3) day prior written notice, during which showing Tenant shall be entitled to have a representative in attendance. After Landlord’s notice to Tenant of any showing under this Section 20.2, Landlord and Tenant shall reasonably cooperate to agree on the time or times thereof, which showing(s) may occur one or more times during any period of five (5) consecutive business days. Thereafter, additional showings to the same party shall require separate notice from Landlord to Tenant as required herein.

SECTION 20.3 Memorandum of Lease.

Upon execution of this Lease, the parties hereby agree to execute, acknowledge and deliver for recording purposes a memorandum of lease in substantially the form attached hereto as Exhibit B. No such memorandum shall include any financial terms of this Lease. Recording, filing and like charges and any stamp, charge for recording, transfer or other tax shall be paid by Tenant. In the event of termination of this Lease, within thirty (30) days after written request from Landlord, Tenant agrees to execute, acknowledge and deliver to Landlord an agreement terminating such memorandum of lease of record. If Tenant fails to execute such agreement within that thirty (30) day period or fails to notify Landlord within that thirty (30) day period of its reasons for refusing to execute such agreement, Landlord is hereby authorized to execute and record such agreement for the sole purpose of terminating the memorandum of lease of record. This provision shall survive any termination of the Lease.

SECTION 20.4 Remedies Cumulative.

No reference to any specific right or remedy shall preclude either party from exercising any other right or from having any other remedy or from maintaining any action to which it may otherwise be entitled at law or in equity. The foregoing shall in no way relieve or release Tenant from its obligation to pay all Rental, except as expressly permitted by Section 9.2(d) hereof. No failure by either party to insist upon the strict performance of any agreement, term, covenant or condition hereof, or to exercise any right or remedy consequent upon a breach thereof, and no acceptance of full or partial rent during the continuance of any such breach, shall constitute a waiver of any such breach, agreement, term, covenant or condition. Except for any express written waiver by Landlord as to any breach by Tenant of its obligations under this Lease, no waiver by Landlord as to any breach of Tenant shall affect or alter this Lease in any way whatsoever.

SECTION 20.5 Successors and Assigns.

Subject to Section 14.1 hereof, this Lease and the covenants and conditions herein contained shall inure to the benefit of and be binding upon Landlord, its successors and assigns,

and shall be binding upon and inure to the benefit of Tenant, its successors and assigns. Upon any sale or other transfer by Landlord of its interest in the Premises and upon the express written assumption of Landlord’s obligations hereunder by the assignee of Landlord’s interest herein, Landlord shall be relieved of all of its obligations arising under this Lease arising after the date of such sale or transfer.

SECTION 20.6 Compliance with Laws and Regulations.

Landlord hereby represents and warrants that, to Landlord’s knowledge and except as disclosed to Tenant in writing, as of the Turnover Date the Premises will not be in violation of the provisions of any federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations and ordinances, including without limitation the Americans With Disabilities Act, as amended and all rules, orders and regulations of the National Board of Fire Underwriters or Landlord’s fire insurance rating organization or other bodies exercising similar functions in connection with the prevention of fire or the correction of hazardous conditions which apply to the Premises. After the Turnover Date, subject to Section 20.17 of this Lease, Tenant, at its sole cost and expense, shall comply with and shall cause the Premises to comply with (a) all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations and ordinances, including without limitation the Americans With Disabilities Act, as amended, affecting the Premises or the use thereof, whether presently existing or enacted after the date hereof, and (b) all rules, orders and regulations of the National Board of Fire Underwriters or Tenant’s fire insurance rating organization or other bodies exercising similar functions in connection with the prevention of fire or the correction of hazardous conditions which apply to the Premises.

SECTION 20.7 Captions and Headings.

The Article and Section captions and headings are for convenience of reference only and in no way shall be used to construe or modify the provisions set forth in this Lease.

SECTION 20.8 Broker’s Commission.

Each of the parties (i) represents and warrants that there are no claims for brokerage commissions or finders’ fees in connection with the execution of this Lease for which the other party will be obligated, other than that of Whiteside Industrial Properties (“Broker”), whose commission shall be paid by Landlord in accordance with a separate agreement between Landlord and Broker, and (ii) except with respect to Broker, agrees to indemnify the other against, and hold it harmless from, all liability arising from any such claim including, without limitation, attorneys’ fees.

SECTION 20.9 No Joint Venture.

Any intention to create a joint venture or partnership relation between the parties hereto is hereby expressly disclaimed.

SECTION 20.10 No Option.

The submission of this Lease for examination does not constitute a reservation of or option for the Premises, and this Lease shall become effective only upon execution and delivery thereof by both parties.

SECTION 20.11 No Modification.

This writing is intended by the parties as a final expression of their agreement and as a complete and exclusive statement of the terms thereof, all negotiations, considerations and representations between the parties having been incorporated herein. No course of prior dealings between the parties or their officers, employees, agents or affiliates shall be relevant or admissible to supplement, explain or vary any of the terms of this Lease. Acceptance of, or acquiescence in, a course of performance rendered under this or any prior agreement between the parties or their affiliates shall not be relevant or admissible to determine the meaning of any of the terms of this Lease. No representations, understandings or agreements have been made or relied upon in the making of this Lease other than those specifically set forth herein. This Lease can be modified only by a writing signed by both parties.

SECTION 20.12 Severability.

If any term or provision, or any portion thereof, of this Lease, or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances, other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law.

SECTION 20.13 Third Party Beneficiary.

Nothing contained in this Lease shall be construed so as to confer upon any other party the rights of a third party beneficiary except rights contained herein for the benefit of a Mortgagee.

SECTION 20.14 Authority; Good Standing.

Tenant represents and warrants to Landlord that (i) Tenant is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware and authorized to do business in the State of North Carolina and (ii) the person executing this Lease on behalf of Tenant is authorized to do so. Upon the request of Landlord, Tenant shall provide to Landlord a certificate of the Secretary or Assistant Secretary of Tenant stating the officers of Tenant, the specimen signature of the officer of Tenant who will execute this Lease and a resolution of the board of directors of Tenant authorizing the officer of Tenant who will execute this Lease to execute and deliver this Lease on behalf of Tenant. Landlord represents and warrants to Tenant that (i) Olds is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware and (ii) the person executing this Lease on behalf of Olds and La Gatta is duly authorized to do so. Upon the request of Tenant, Landlord shall provide to Tenant a certificate of the Secretary or Assistant Secretary of Olds stating the officers of Olds, the specimen signature of the officer of Olds who will execute this Lease and a resolution of the

board of directors of Olds authorizing the officer of Olds who will execute this Lease to execute and deliver this Lease on behalf of Olds.

SECTION 20.15 Applicable Law.

This Lease and the rights and obligations of the parties hereunder shall be construed in accordance with the laws of the State of North Carolina.

SECTION 20.16 Performance of Landlord’s Obligations by Mortgagee.

Tenant shall accept performance of any of Landlord’s obligations hereunder by any Mortgagee.

SECTION 20.17 Hazardous Substances.

(a) Except as disclosed on the Tenant’s Questionnaire attached hereto as Exhibit C, Tenant agrees that it shall not store, use, possess, generate, dispose, release, spill or dispose of (collectively “Hazardous Substance Activity”) any Hazardous Substances from, on or under the Premises or knowingly permit any other party to engage in any Hazardous Substance Activity from, on or under the Premises. Tenant shall cause all of its Hazardous Substance Activity on the Premises during the term to be conducted in accordance with all applicable laws. Tenant shall indemnify and hold harmless Landlord and Landlord’s officers, members, managers, agents and employees (collectively, the “Landlord Indemnified Parties”) from any claim, demand, liability, damage, loss or expense (including attorneys’ fees and court costs) that Landlord might suffer as a result of any Hazardous Substance Activity of Tenant, any agent of Tenant, or any other person present at the Premises by permission of Tenant (a “Tenant Permittee”), from, on or under the Premises during the Term, except to the extent any such claim, demand, liability, damage, loss or expense is caused by or arises out of (i) any Hazardous Substance Activity by Landlord or any agent of Landlord (a “Landlord Hazardous Substance Activity”), or (ii) any Hazardous Substance Activity occurring prior to the Turnover Date (a “Previous Hazardous Substance Activity”), provided, however, that Tenant shall be responsible to indemnify and hold the Landlord Indemnified Parties harmless from and against any such claim, demand, liability, damage, loss or expense if, and only to the extent, physically caused by Tenant’s knowing or negligent exacerbation of any Landlord Hazardous Substance Activity or Previous Hazardous Substance Activity. In any action by a Landlord Indemnified Party to enforce Tenant’s obligations hereunder arising out of any Hazardous Substance which is of the same type or nature as the Hazardous Substances, or any constituent element thereof, which are either (a) the subject of the Corrective Action Plan No. 9735209 dated April 16, 1999 that Honeywell International, Inc. is implementing at the Premises (the “CAP”) or (b) identified in the Environmental Site Assessment report for the Premises prepared by Erler & Kalinowski, Inc. and dated January 14, 2003 (the “Phase I”), the burden shall be upon such Landlord Indemnified Party to show that the claim, demand, liability, damage, loss or expense for which indemnity is sought was caused by Tenant’s Hazardous Substance Activity and not by any Landlord Hazardous Substance Activity or Previous Hazardous Substance Activity; provided, however, if Tenant conducted any Hazardous Substance Activity on the Premises involving such Hazardous Substance or a constituent element thereof, the burden of proof shall not be allocated to either Landlord or Tenant pursuant to this paragraph.

Landlord shall indemnify and hold harmless Tenant and Tenant’s officers, members, managers, agents and employees (collectively, the “Tenant Indemnified Parties”) from any claim, demand, liability, damage, loss or expense (including attorneys’ fees and court costs) that any Tenant Indemnified Party might suffer as a result of any Hazardous Substance Activity of Landlord, or any agent of Landlord, from, on or under the Premises during the Term.

The indemnities contained in this Section 20.17(a) shall survive the expiration or earlier termination of this Lease. “Hazardous Substances” means and includes any of the substances, materials, elements or compounds that are contained in the list of hazardous substances adopted by the United States Environmental Protection Agency (the “EPA”) and the list of toxic pollutants designated by the United States Congress or the EPA and substances, materials, elements or compounds affected by any other federal, state or local statute, law ordinance, code, rule regulation, order or decree now or at any time hereafter in effect regulating, relating to or imposing liability or standards of conduct concerning any hazardous, toxic, dangerous, restricted or otherwise regulated waste, substance or material, as now or at any time hereafter in effect. Tenant shall be entitled to modify from time to time as reasonably necessary for the conduct of Tenant’s Permitted Use the Hazardous Substance Activities described on Exhibit C, subject to the prior approval in writing by Landlord, which approval shall not be unreasonably withheld or delayed.

(b) Tenant shall notify Landlord promptly in the event of any spill or release of Hazardous Material into, on, or under the Premises or the Project, regardless of the source or cause of such spill or release, whenever Tenant knows or suspects that such a spill or release has occurred, and shall promptly notify Landlord of any other breach, violation or default by Tenant of Tenant’s obligations under this Section 20.17. Tenant shall promptly provide copies to Landlord of all notices, correspondence, claims or other documents received or sent by Tenant or Tenant’s agents, employees or consultants relating to the violation of any environmental law related to the Premises.

(c) Upon twenty-four (24) hour prior notice by Landlord (except in an emergency or to prevent potential exacerbation of any contamination, in which event no prior notice shall be necessary), Tenant shall permit Landlord or Landlord’s agents or consultants to enter upon the Premises and the Project to conduct environmental site assessments and such other examinations, tests, inspections and reviews (including but not limited to geohydraulic survey of soil and subsurface conditions and inspections of the improvements located on the Premises) of the Premises as Landlord shall reasonably desire to discover, assess, evaluate or monitor or otherwise address any potential environmental problem, including without limitation the existence of Hazardous Substances on the property.

(d) Landlord represents that as of the Turnover Date, to Landlord’s knowledge and except as disclosed to Tenant in writing, the Premises are not in violation of any environmental laws.

(e) Remedial Acts. In the event of any spill or release of or the presence of any Hazardous Substance affecting the Premises, whether the same originates or emanates from the Premises or any contiguous real estate, Landlord may, upon reasonable notice to Tenant, at Landlord’s election, but without obligation to do so, give such notices, cause such work to be

performed at the Premises and take any and all other actions as Landlord reasonably shall deem necessary or advisable in order to fully remedy said spill, release or presence of hazardous Substance. If the spill, release or presence of Hazardous Substance constitutes a breach, default or violation by Tenant of its covenants or obligations hereunder or is otherwise the responsibility of Tenant under applicable law, then (1) Landlord may undertake any or all actions Landlord may reasonably deem necessary or appropriate to remediate such Hazardous Materials to the extent required by applicable law or cure such breach, default or violation or, upon Landlord’s demand, Tenant at Tenant’s expense shall promptly commence and diligently prosecute to completion all actions reasonably necessary or appropriate to remediate and cleanup all Hazardous Substances as and to the extent required by law, and (2) all reasonable expenses and costs incurred by Landlord in connection with such spill, release or presence of Hazardous Substance, or the remediation or cure thereof and the enforcement of Landlord’s remedies hereunder, together with interest at the Default Rate, shall be due and payable by Tenant to Landlord upon demand.

SECTION 20.18 Net Lease.

Except for the warranty obligations of Landlord under Sections 10.1. 20.6 and 20.17(d), the Allowance provided under Section 9.1, and the maintenance, repair and replacement obligations of Landlord under Section 9.2(a) and Section 9.2(d), it is the purpose, intent and agreement of Landlord and Tenant that the Annual Basic Rental payable hereunder shall be a net return to Landlord, undiminished by the Taxes, setoff, abatement or any part thereof, or any other maintenance or repair costs, costs of insurance, or any other charges of any kind or nature whatsoever relating to the Premises or any Improvements, which may arise or become due during the term of this Lease, all of which shall be paid by Tenant.

SECTION 20.19 Tenant Information.

Tenant agrees it will provide to Landlord, no more often than three times per Rental Year, such financial and other information regarding Tenant as Landlord may reasonably request, and Landlord may use such information for the purpose of obtaining financing for the Premises, for marketing the Premises for sale to a prospective buyer, or, upon express written consent of Tenant, which consent shall not be unreasonably withheld, conditioned or delayed for any other reasonable business purpose of Landlord.

SECTION 20.20 Tenant questionnaire.

Tenant shall complete and return to Landlord on or before Tenant’s execution hereof the Tenant’s Questionnaire attached hereto as Exhibit C and incorporated herein by reference. Tenant hereby represents and warrants to Landlord that Tenant’s Questionnaire, as completed by Tenant, and all of Tenant’s answers and responses thereon or attached thereto, are true, correct and complete.

SECTION 20.21 Time of Essence.

Time is of the essence of each term and provision of this Lease.

SECTION 20.22 Surrender of Lease Not Merger.

The voluntary or other surrender of this Lease by Tenant, or mutual cancellation hereof, or the termination of this Lease by Landlord, shall not cause a merger.

SECTION 20.23 Landlord; Transfer by Landlord.

For purposes hereof, “Landlord” shall mean the parties defined as Landlord on page 1 hereof and any assignee or transferee of Landlord’s interest in the Premises. Landlord and each assignee or transferee shall only be the “Landlord” hereunder and shall only be liable for the obligations and liabilities of Landlord arising under this Lease during such party’s period of ownership of the Premises. Tenant’s rights under this Lease will not be affected by any transfer or conveyance by Landlord, and Tenant agrees to attorn to any assignee or transferee.

[Signature Page Follows}

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have executed this Lease under seal as of the day and year first above written.

	LANDLORD:

	OLDS PROPERTIES CORPORATION,
	a Delaware corporation


	By:
	Name:
	Title:



	John H.O. La Gatta


	TENANT:

	WARNER ELECTRIC INC.,
	a Delaware corporation


	By:
	Name:		Thomas M. O’Brien
	Title:		Vice President, General Counsel and
			Secretary

Attachments:

Exhibit A – Legal Description of the Land

Exhibit B – Form of Memorandum of Lease

Exhibit A

Legal Description of the Land

All that certain parcel of real estate, together with improvements thereon, situate, lying, and being in the County of Mecklenburg, State of North Carolina, more particularly described as follows:

BEGINNING at an old iron, a corner of the property conveyed to W. H. Keistler and wife by deed of J. T. McGee, Trustee, dated October 9, 1920, and recorded in Book 436, Page 9, in the Office of the Register of Deeds for Mecklenburg County, North Carolina, which point of beginning is located at or near the Easterly terminus of the center line of Linwood Avenue and which point of beginning is located North 54-46-30 West, a distance of 295.05 feet from an iron stake in the Northwesterly margin of the right of way of interstate Highway No. 85, the intersection of said right of way with one of the Westerly lines of said Keistler property; and running thence a new line through said Keistler property North 6-25-51 West 555.99 feet to an old iron; running thence North 73-34-12 East 860.57 feet to an iron, the Northerly corner of said Keistler property, running thence South 18-34-57 East, a distance of 529.75 feet to an iron in the Northerly margin of the right of way of Interstate Highway No. 85; running thence with the Northerly margin of the right of way of Interstate Highway No. 85 in a Southwesterly direction and with the arc of a circular curve to the left, a radius of 2994.79 feet, an arc distance of 834.60 feet (Chord South 56-03-21 West 831.90 feet) to an iron in the Northerly margin of the right of way of Interstate Highway No. 85, the intersection of said right of way with one of the lines of said Keistler property; and running thence North 54-46-30 West 296.05 feet to an old iron, the point or place of Beginning, containing 13.622 acres, according to a survey entitled “The Olds Company, Inc.” prepared by Carolina Surveyors, Inc., dated February 5, 1986.

Exhibit B

FORM OF MEMORANDUM OF LEASE

THIS MEMORANDUM OF LEASE (this “Memorandum”) is made as of the 29th day of January, 2003, by and between OLDS PROPERTIES CORPORATION, a Delaware corporation, and JOHN H.O. La GATTA (collectively, “Landlord”) and WARNER ELECTRIC COMPANY, a Delaware corporation (“Tenant”).

WITNESSETH:

WHEREAS, Landlord is the owner of certain real property located in Charlotte, Mecklenburg County, North Carolina, identified by Tax Parcel ID #039-053-16, and more fully described on Exhibit A attached hereto and made a part hereof (the “Premises”); and

WHEREAS, Landlord, as landlord, and Tenant, as tenant, have entered into a certain Lease Agreement (the “Lease”) dated January 29, 2003 for the lease of the Premises on terms more fully set forth therein; and

WHEREAS, the parties hereto desire to execute and record a Memorandum of the Lease.

NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, hereby agree as follows:

1. Tenant. The name of Tenant is Warner Electric Company, a Delaware corporation.

2. Landlord. The name of Landlord is Olds Properties Corporation, a Delaware corporation, and John H.O. La Gatta.

3.	Addresses.	Tenant’s address is:	997 Lenox Drive, Suite 111
			Lawrenceville, New Jersey 08648.

		Landlord’s address is:	John H.O. La Gatta
			50 West Liberty Street, Suite 1080
			Reno, Nevada 89501
			Facsimile: (775) 785-2245

4. Date of Lease. The Lease is dated January 29, 2003.

5. Premises. The property that is the subject of the Lease is more fully described on Exhibit A attached hereto and made a part hereof.

6. Term. The term of the Lease commences February 1, 2003 and expires February 28, 2013, subject to prior termination provisions set forth in the Lease. Tenant has three (3) options of four (4) years each to extend the term of the Lease.

7. Right of First Offer. The Lease contains a right of first offer in favor of Tenant.

8. Right of First Refusal. The Lease contains a right of first refusal in favor of Tenant.

9. Incorporation by Reference. This Memorandum is not intended to set forth all of the terms of the Lease, and reference is hereby made thereto for all of the terms. In the event of conflict between the terms of the Lease and this Memorandum, the terms of the Lease shall control. All provisions of the Lease are incorporated herein by this reference as though fully set forth.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have executed this Lease under seal as of the day and year first above written.

	LANDLORD:
	OLDS PROPERTIES CORPORATION,
	a Delaware corporation
	By:
	Name:
	Title:



	John H.O. La Gatta


	TENANT:
	WARNER ELECTRIC INC.,
	a Delaware corporation
	By:
	Name:		Thomas M. O’Brien
	Title:		Vice President, General Counsel and
			Secretary

EX-10.10 40 a2155511zex-10_10.htm EXHIBIT 10.10

Exhibit 10.10

DATED AS OF THE 4th DAY OF November, 1994

ONTARIO NET INDUSTRIAL SINGLE LEASE

BETWEEN

SLOUGH ESTATES CANADA LIMITED

AS LANDLORD

- and -

KILIAN MANUFACTURING,
a division of INGERSOLL-RAND CANADA INC.

AS TENANT

BUILDING NO. 703

ADDRESS: 413 Horner Avenue, Etobicoke, Ontario

INDEX TO LEASE

CLAUSE

1.01		GRANT
2.01		TERM
3.01		NET RENT
		Deposit
		Early Occupancy
4.00		TENANT’S COVENANTS
		Rent
		Accord and Satisfaction
		Additional Rent
		Rental Insurance
		Dilapidation etc
		Municipal Taxes
		Business Taxes
		Tax on Rent
		Maintenance Administration Fee
		Utility Charges
		Cleaning
		Repairs and Maintenance
		Landlord May View Repairs, etc
		Landlord May Enter, etc
		Leave Premises in Good Repair
		Use of Premises
		Insurance Risks
		Contaminants
		Waste, Offensive Business
		Auction Sale, Nuisance
		Compliance with Statutes, etc
		Rules and Regulations
		Alterations to Premises
		Removal of Goods from Premises
		Waiver of Limitation of Distress
		Tenant’s Sign
		No Additional Signs
		No Assignment or Subletting
		Showing Premises
		Debris
		Outside Storage
		Notice of Accidents or Defects
		Heavy Equipment
		Indemnity of Landlord
		Tenant’s Insu rance
		Registration
		Liens on Alternations, etc.
		Tenant’s Certificates
		Relocation

5.01		PROVISOS OF RE-ENTRY
		Remedies of Landlord
6.00		LANDLORD’S COVENANTS
		Quiet Enjoyment
		Insurance
7.00		MUTUAL COVENANTS
		Net Rent
		Landlord May Perform Tenant’s Obligation
		Default
		Forfeiture
		Limitation of Landlord’s Liability
		Waiver
		Fire, etc
		Tenant’s Parking
		Collection Charges
		Acceptance of Premises
		Lien
		Overholdmg
		Amounts Owing as Additional Rent
		Interest on Amounts Owing
		Notices
		Subordination
		Entire Agreement
		Change of Control Tenant
		Adjustments
		Expropriation
		Force Majeure
		Covenants; Severability
		Titles
		Successors and Assigns
		Smoking
		Confidentiality
		Personal
8.01		SCHEDULES


Schedule “A” - Site Plan
Schedule “B” - Fixtures
Schedule “C” - Floor Plan
Schedule “D” - Landlord’s Work
Schedule “E” - Rules and Regulations
Schedule “F” - Option to Extend

		THIS LEASE made this 4th day of November, 1994

		IN PURSUANT OF THE SHORT FORMS OF LEASES ACT:

		BETWEEN: SLOUGH ESTATES CANADA LIMITED a company incorporated under the laws of the Province of Ontario, having its head office at the City of Toronto, in the Province of Ontario


		(hereinafter called the “Landlord’)

		OF THE FIRST PART,

		AND: KILIAN MANUFACTURING, a division of INGERSOLL-RAND CANADA INC.


		(hereinafter called the “Tenant”)

		OF THE SECOND PART.


		WITNESSETH:

DEMISE		1.01 That in consideration of the rents, covenants and agreements hereinafter reserved and contained on the part of the Tenant to be paid, observed and performed, the Landlord hereby demises and leases unto the Tenant all that certain parcel or tract of land and premises located in the Landlord’s Industrial Estate in the City of Etobicoke, in the Province of Ontario, shown outlined in blue in Schedule ’A” hereto, together with the building or buildings and other improvements now or hereafter erected thereon, and municipally known as 413 Horner Avenue, (hereinafter called the “Building”) and known as Building 703, consisting of approximately 30,120 square feet shown outlined in red on Schedule ”A’ hereto (subject to final measurement) and the fixtures listed in Schedule ”B” hereto (hereinafter called the “Premises”).

TERM		2.01 TO HAVE AND TO HOLD the Premises for and during the term (hereinafter called the “Term”) of FIVE (5) years to be computed from the 1st day of November, 1994 and from thenceforth next ensuing and fully to be completed and ended on the 31st day of October, 1999.

NET RENT		3.01 (a) YIELDING AND PAYING THEREFORE yearly and every year during the Term unto the Landlord the sum of:

		(i) For the period commencing November 1st, 1994 to October 31st, 1995 of the Term, the sum of THIRTY THOUSAND ONE HUNDRED and TWENTY and—00/100 Dollars ($30,120.00)

		per annum of lawful money of Canada, payable in advance in equal monthly installments of TWO THOUSAND FIVE HUNDRED and TEN and—00/100 Dollars ($2,510.00) each, on the first day of each and every month. The foregoing “Net Rent” is based upon an annual rate of $1.00 per square foot times the Rentable Area of the Premises of 30,120 square feet.

		(ii) For the period commencing November 1st, 1995 to October 31st, 1996 of the Term, the sum of THIRTY-SEVEN THOUSAND SIX HUNDRED and FIFTY and—00/100 Dollars ($37,650.00) per annum of lawful money of Canada, payable in advance in equal monthly installments of THREE THOUSAND ONE HUNDRED and THIRTY-SEVEN and—50/100 Dollars ($3,137.50) each, on the first day of each and every month. The foregoing “Net Rent” is based upon an annual rate of $1.25 per square foot times the Rentable Area of the Premises of 30,120 square feet.

		(iii) For the period commencing November 1st, 1996 to October 31st, 1997 of the Term, the sum of FORTY-FIVE THOUSAND ONE HUNDRED and EIGHTY and—00/100 Dollars ($45,180.00) per annum of lawful money of Canada, payable in advance in equal monthly installments of THREE THOUSAND SEVEN HUNDRED and SIXTY-FIVE and—00/100 Dollars ($3,765.00) each, on the first day of each and every month. The foregoing “Net Rent” is based upon an annual rate of $1.50 per square foot times the Rentable Area of the Premises of 30,120 square feet.

		(iv) For the period commencing November 1st, 1997 to October 31st, 1998 of the Term, the sum of FIFTY-TWO THOUSAND SEVEN HUNDRED and TEN and—00/100 Dollars ($52,710.00) per annum of lawful money of Canada, payable in advance in equal monthly installments of FOUR THOUSAND THREE HUNDRED and NINETY-TWO and—00/100 Dollars ($4,392.50) each, on the first day of each and every month. The foregoing “Net Rent” is based upon an annual rate of $1.75 per square foot times the Rentable Area of the Premises of 30,120 square feet.

		(v) For the period commencing November 1st, 1998 to October 31st, 1999 of the Term, the sum of SIXTY THOUSAND TWO HUNDRED and FORTY and—00/l00 Dollars ($60,240.00) per annum of lawful money of Canada, payable in advance in equal monthly installments of FIVE THOUSAND and TWENTY and—00/100 Dollars ($5,020.00) each, on the first day of each and every month. The foregoing “Net Rent” is based upon an annual rate of $2.00 per square foot times the Rentable Area of the Premises of 30,120 square feet.

Deposit		(b) The Landlord hereby acknowledges receipt of a deposit in the amount of ELEVEN THOUSAND SIX HUNDRED and

		FOUR —15/100 Dollars ($11,604.15) will be applied towards last two (2) months’ rental payment due.

Early Occupancy		(c) Notwithstanding the foregoing and provided the Lease has been fully executed, the Tenant shall have joint occupancy to the Premises prior to the commencement of the Term. This access period Shall be free of Net Rent. During this period, the Tenant will be responsible for Additional Rent as outlined in this Lease and all other terms and conditions of this Lease Shall be in full force and effect.

TENANTS COVENANTS		4.00 The Tenant covenants with the Landlord as follows:

Rent		4.01 The Landlord shall advise the Tenant each calendar year during the Term of its revised estimate of the amount of the Additional Rent payable by the Tenant for such year and shall provide the Tenant with the particulars thereof.

Accord and Satisfaction		4.02 No payment by Tenant or receipt by Landlord of a lesser amount than any installment or payment of Rent due shall be deemed to be other than on account of the amount due, and no endorsement or statement on any check or payment of Rent shall be deemed an accord and satisfaction. Landlord may accept such cheque or payment without prejudice to Landlord’s right to recover the balance of such installment or payment of Rent, or pursue any other remedies available to Landlord.

Additional Rent		4.03 to pay to the Landlord as “Additional Rent” the following: -

Insurance		(a) (i) a sum or sums of money equal to the expense incurred by the Landlord in effecting and maintaining the insurance on the Premises provided for in paragraph 6.02 hereof;

Rental Insurance		(ii) a sum or sums of money equal to the expense incurred by the Landlord in effecting and maintaining rental insurance against loss of one year’s rent due to the perils specified in paragraph 6.02 hereof; and

Dilapidation etc.		(iii) any and all amounts expended by the Landlord in fulfillment of the Tenant’s obligations under this lease pursuant to paragraph 7.02 hereof: such additional rent to be paid without any deduction whatsoever upon the receipt of a written notice of same by the Landlord and to be recovered in the same manner as rent in arrears;,

Municipal Taxes		(b) in each and every year during the Term to pay when due each installment of all municipal property taxes, rates (including local improvement rates), duties and assessments now or at any time during the Term rated, charged, levied and assessed against the Premises or any part thereof and/or against any machinery, equipment or other facilities now or at any time during the Term brought in or onto the Premises or any part thereof and to pay any similar tax not now contemplated which

		may be levied at any time during the Term by any competent government or municipal body in lieu of property taxes. Estimated cost for the calendar year 1994 is $2.19 per square foot;

Business Taxes		(c) (i) to pay all taxes, rates, duties, assessments and licence fees whatsoever whether municipal, parliamentary or otherwise now charged or hereafter charged upon or in respect of the contents of the Premises and/or upon and/or in respect of any business or other activity carried on upon and/or in connection with the Premises and/or upon the Tenant on account of the Premises or such contents, business or other activity and to pay any similar tax not now contemplated which may be levied at any time during the Term by any competent government or municipal body in lieu of such taxes, rates, duties, assessments and licence fees now charged;

Tax on Rent		(ii) If at any time during the term of this Lease or any renewals thereof a tax or excise on rents or other tax, however described, is levied by any Governmental authority against the Landlord for the minimum rent or any other monies collectable under this Lease, the Tenant covenants to pay and discharge such tax or excise on rents or other tax or levy but only to the extent of the amount thereof which is lawfully assessed or imposed upon the Landlord and which as so assessed or imposed as a direct result of the Landlord’s ownership of the Demised Premises, or of this Lease or of the rental occurring under this Lease, it being the intention of the parties hereto that all rent to be paid under this Lease, shall be paid to the Landlord absolutely net without any deduction of any nature whatsoever.

Maintenance Administration Fee		(d) To pay Tenant’s proportionate share of the business taxes, if any, against the common areas of the said lands charged to the Landlord and all other taxes, assessments and charges of any kind and nature whatsoever with respect to the said lands and without limitation, the Tenant’s proportionate share of all coats and expenses (other than all such taxes, assessments, charges, costs and expenses for which Tenant is directly liable under the terms of this Lease), for the operation, management, maintenance, replacement and repair of the said lands, the buildings thereon and the ‘facilities thereon and therein, including without limitation, insurance, services, maintenance, management fee, full and/or part-time supervision (and applicable benefits and associated overhead costs), snow and ice removal, lighting, repairs, driveways, sidewalks, lawns, asphalting, grading, consulting (if required), doors, windows, electrical repairs and supplies, elevators (if applicable), refuse (if applicable), HVAC (if applicable), janitorial, landscaping, painting, plumbing, roof repairs, security and alarms, structural repairs, parking areas and all other public and/or common areas on the said lands and the Demised Premises on the said lands, all expenditure made by the Landlord in an effort to promote energy conservation, accounting costs incurred in connection with preparation of statements and opinions for Tenants, plus an administration fee of 10% of the total of all the costs

		and expenses hereinbefore set out. Estimated costs for the calendar year 1994 is Maintenance $0.34 per square foot, and Insurance $0.06 per square foot;

Utility Charges		(e) to pay all or its proportionate share whichever is applicable of all rates and charges for electricity, water, telephone, gas, oil, heating, and other similar utilities supplied to the Premises;

Cleaning		4.04 to keep and maintain the Premises and the windows thereof in a clean and sanitary condition, not to allow any refuse or debris to accumulate on or about the Premises;

Repairs and Maintenance		4.05 from time to time and at all times during the term at its own cost well and sufficiently to repair, cleanse, paint, maintain, amend and keep the Premises and the fixtures therein and the walls, roofs, foundations, water service and gas connections, pipes, mains, fences, vaults, roads, sewers and drains in, on or under the Premises and the appurtenances thereof in a good and workmanlike manner and to the satisfaction of the Landlords engineers damage by the perils set forth in paragraph 6.02 hereof and inherent structural defects only excepted and in particular without limiting the generality of the foregoing.

		In the last year of the Term (or, if this lease is earlier terminated, in the year of termination) thoroughly to prepare and paint, in a good and workmanlike manner and to the satisfaction of the Landlord’s engineers, all interior portions of the Building usually painted, applying at least two coats of prime quality oil or such other paint as maybe approved by the Landlord and to grain, varnish, wash, paint, caulk, whiten and colour all interior portions of the Building as were so treated at or subsequent to the commencement of the Term. The Tenant covenants and agrees, at the Tenant’s own cost and expense, at all times during the term of this Lease, to obtain and maintain an inspection and maintenance service contract or contracts in relation to the mechanical systems in the Demised Premises including, without limitation, the heating, ventilation, air conditioning, fire protection, lighting, electrical installations, plumbing, furnace, sprinkler system, and other mechanical systems including shipping doors and building hardware, as a prudent owner would obtain and maintain;

Landlord May View Repairs, etc.		4.06 that the Landlord may enter and view the state of maintenance and repair and the Tenant will repair, according to notice in writing, damage by the perils specified in paragraph 7.02 hereof (and if applicable paragraph 7.03 hereof) and inherent structural defects only excepted;

Landlord May Enter, etc.		4.07 to permit the Landlord, its servants and agents at all reasonable times to enter upon the Premises for the purpose of taking inventory of the Landlord’s property thereon, for the purpose of inspecting and making such repairs, extensions, alterations and improvements as the Landlord may deem necessary to the adjoining property of the Landlord

		and to any drains, pipes, wires, cables, apparatus and works in, through, under or over the Premises or any adjoining Premises or for the purpose of removing any article or remedying any condition which in the opinion of the Landlord would be likely to lead to the cancellation of any policy of insurance on the Premises and the Tenant shall not be entitled to compensation of any kind for any inconvenience, nuisance, loss or discomfort occasioned thereby nor shall such entry be deemed to be a re-entry by the Landlord;

Leave Premises in Good Repair		4.08 to leave the Premises in good repair, damage by the perils specified in paragraph 6.02 hereof and inherent structural defects only excepted;

Use of Premises		4.09 not to use the Premises or any part thereof as a dwelling house, place of amusement, meeting ball, theatre or cinematograph theatre nor to use the Premises or any part thereof or permit the same to be used for any other purpose than that of operations incidental to warehouse, distribution and light manufacturing and assembly of steel products.

		Nothing herein shall be so interpreted as to imply that this Lease is conditional or dependent upon the Tenant obtaining any permit or licence from any municipal, provincial or other authority;

		Tenant agrees to supply the Landlord with written verification of the Tenant’s intended use in the Premises.

Insurance Risks		4.10 not to do or permit to be done in, upon or about the Premises any act or thing which may make void or voidable, or result in the increase of the premium payable in respect of, any policy of insurance on the Building or any part thereof or adjoining or near the Premises. If the rate of such insurance shall be increased by reason of any use of the Premises or by reason of anything done or permitted to be done or committed by the Tenant or anyone permitted by the Tenant to be in, on or about the Premises the Tenant shall on demand pay to the Landlord the amount of such increase and if the insurance maintained by the Landlord pursuant to paragraph 7.02 hereof shall be cancelled by the insurer by reason of the use or occupation of the Premises or any part thereof by the Tenant or by. any assignee or subtenant of the Tenant or by anyone permitted by the Tenant to be in, on or about the Premises, the Landlord may, at its option, in addition to any other remedy it may have, forthwith terminate this Lease by notice in writing to the Tenant and thereupon rent (including additional rent) and any other payments for which the Tenant is liable under this Lease shall be apportioned (where necessary) and paid in full to the date of such termination and the Tenant shall immediately deliver up possession of the Premises to the Landlord and the Landlord may re-enter and take possession of the same;

		To give written notice to Landlord and the company or companies carrying the applicable insurance on the said Lands and/or the Demised

		Premises, of any vacancy, unoccupancy or cessation of operations for more than thirty (30) consecutive days on the Demised Premises or such other times as set out in any such insurance policy and of the supply of gasoline, benzene, naphtha or other material of equal or greater volatility exceeding one (1) gallon in all to the Demised Premises and of any interruption to or flaw or defect in the sprinkler system if any, on the Demised Premises.

Contaminants		4.11 (i) The Tenant shall not store, create, discharge or bring onto the Premises, the Building, the Complex or the industrial park of which the Premises form part, any contaminants as this term is defined in the Environmental Protection Act, R.S.O. 1980, Chapter 141, as amended, or any substance which is an equivalent under any succeeding legislation (a “Contaminant”) unless such Contaminant is required in the ordinary course of carrying on the Tenant’s business.

		The Tenant shall at any and all times during the Term keep the Premises, the Building and the complex or industrial park of which the Premises form part free from any and all Contaminants resulting from its use and occupation of the Premises. In the event, the Tenant fails to comply with this obligation, the Tenant agrees to indemnify and save the Landlord harmless from loss, cost or expense arising out of any governmental demand, direction or request that the Landlord or the Tenant test for, monitor, clean up, remove, contain, treat, detoxify or neutralize such Contaminants and;

		(ii) it is hereby understood and agreed that the Landlord, in addition to any other inspection right, shall have the right, prior to the expiry of the Term hereof or earlier termination of this Lease, upon having reasonable ground for believing that the Tenant is not in compliance with this Section 4.11, to cause an independent environmental audit of the Premises and the building and the Tenant shall be responsible for the cost of such audit, and any clean up. removal, containment, treatment, detoxification or neutralization of any Contaminant as required if caused by the Tenant (provided that in the event the audit reveals no material breach or act of non-compliance by the Tenant, then the cost of the audit shall be borne solely by the Landlord), and;

		(iii) Tenant further agrees to indemnify and save harmless the Landlord from any damage arising out of the actual, alleged or threatened discharge, disposal, release or escape of such Contaminants at or from the Premises or at or from the Building, the complex or industrial park of which the Premises form part and the surrounding lands and notwithstanding anything to the contrary herein contained this indemnity shall survive the expiry or termination of this Lease for a period of one (1) year following said expiry. Further the Landlord agrees to provide the Tenant within three (3) months of the Tenant’s occupancy an environmental audit of the Premises.

Waste, Offensive Business		4.12 not to do or suffer any waste, disfiguration or injury to the Premises or any part thereof and not to use or permit to be used any part of the Premises for any dangerous, noxious or offensive trade or business and not to cause or permit any nuisance in, on or about the Premises;

Auction Sale, Nuisance		4.13 not to conduct any auction sale on the Premises and not to do or permit to be done in, on or about the Premises any act or thing which shall or may be or become a nuisance, annoyance or inconvenience to the Landlord or its tenants or the occupiers of any Premises in the neighborhood of the Premises;

Compliance with Statutes, etc.		4.14 not to do or permit to be done or omit or permit to be omitted any act, matter or thing in or respecting the Premises which by virtue of any statute, regulation, by-law or order of any duly constituted public authority should not be done or ought to be done or which shall contravene any of the provisions thereof and to indemnify and keep indemnified the Landlord against all actions, proceedings, costs, expenses, claims and demands in respect of any such act, matter or thing contravening any of the said provisions as aforesaid;

Rules and Regulations		4.15 that the Tenant and the employees of the Tenant and all persons visiting or doing business with the Tenant on the Premises shall, while on the Premises, be bound by and observe all reasonable rules and regulations made by the Landlord of which notice in writing shall be given to the Tenant and all such rules and regulations shall be deemed to be incorporated in and form part of this lease;

Alterations to Premises		4.16 not at any time during the Term, without the prior written consent of the Landlord, to erect any new building on the Premises or make any alterations, whether structural or otherwise, or any addition to the Building or make any excavation on the Premises or interfere with or by building or otherwise cause access to any pipe, wires, cables, drains, sewers, watercourses, conduits or subways which now are or at any time hereafter may be under, in or through the Premises to be interfered with or adversely affected or carry out any development of any kind whatsoever; provided that any alterations, additions or improvements so erected or made shall on the expiration or other termination of this Lease be and remain the property of the Landlord; provided, however, that the Tenant may remove his fixtures. Further the Tenant agrees to restore the Premises to their original condition at the expiration of the Lease term, normal wear and tear excepted, at the Landlord’s option.

Removal of Goods from Premises		4.17 not to sell, dispose of or remove any of its goods or chattels from the Premises except in the ordinary course of the Tenant’s business, whether or not there is rent in arrears and to permit the Landlord to seize and sell all such goods and chattels at any place to which they have been removed contrary to the provisions of this paragraph;

Waiver of Limitation of Distress		4.18 the Tenant waives and renounces the benefit of any present or future statute taking away or limiting the Landlord’s right to distress and agrees with the Landlord that notwithstanding any such statute, none of the Tenant’s goods and chattels on the Premises at any time during the Term shall be exempt from levy by distress for rent in arrears;

Tenant’s Sign		4.19 that the Tenant shall within three months from the date hereof erect or paint a sign on the Premises setting out the name and business of the Tenant and shall maintain the same in a state of good repair and appearance. Before erecting or painting the said sign the Tenant shall obtain the written approval of the Landlord;

No Additional Signs		4.20 that the Tenant will not at any time during the Term erect or cause to be erected on the Premises any sign, signboard or other outdoor advertising, without first obtaining the written consent of the Landlord;

No Assignment or Subletting		4.21 the Tenant shall not assign or sublet or allow the Premises or any part thereof to be occupied or used by any other person, firm or corporation without the prior written consent of the Landlord, which consent may not unreasonably be withheld, notwithstanding the provisions of Section 23 of The Landlord and Tenant Act;

Showing Premises		4.22 to permit the Landlord or its agents at any time within three months next preceding the expiration or sooner determination of the Term to enter upon the Premises and to affix upon any suitable part thereof a notice for selling or reletting the same and not to remove or obscure the same and to permit all persons authorized in writing by the Landlord or its agents to view the Premises at all reasonable hours;

Debris		4.23 that the Tenant will not at any time during the Term allow any refuse or debris to accumulate in or about the Premises and will at all times keep the Premises in a clean and wholesome condition and will observe all Municipal by-laws and regulations relating to the drains and sewers servicing the Premises;

Outside Storage		4.24 not at any time during the Term to store any material or supplies of any kind on or about any part of the Premises outside the Building without the prior written consent of the Landlord.

Notice of Accidents or Defects		4,25 to give to the Landlord prompt written notice of any accident or other defect in the water pipes or heating apparatus telephone, electric light or other wires, but unless otherwise expressly provided there shall be no obligation on the part of the Landlord to repair or make good any such matters;

Heavy Equipment		4.26 not to bring upon the Premises or any part thereof any machinery, equipment, article or thing that by reason of its weight or size might damage the Premises and not at any time to overload the floors of the Premises and if any damage is caused to the Premises by any machinery,

		equipment, article or thing or by overloading or by any act, neglect or misuse on the part of the Tenant or any of its agents or servants or any person having business with the Tenant forthwith to repair such damage;

Indemnity of Landlord		4.27 that the Tenant shall indemnify and save harmless the Landlord from any and all liabilities, damages, costs and claims, suits or actions arising out of:-

		(i) any breach, violation or non-performance of any covenants, conditions or agreements in this Lease set forth and contained on the part of the Tenant to be fulfilled, kept, observed and performed;

		(ii) any damage to property occasioned by the use and occupation of the Premises;

		(iii) any injury to any person or persons, including death, resulting at any time in, on or about the Premises, and/or on the roads or sidewalks adjacent thereto;

Tenants Insurance		4.28 At its expense to maintain in force during the Term and any renewal thereof:

		(i) comprehensive general liability insurance against claims for personal injury, death or property damage arising out of all operations of the Tenant including Tenant’s legal liability, products and completed operations and contractual liability with respect to the business carried on in and from the Premises and the Building by the Tenant or any of its employees, servants, agents, contractors, or persons for whom the Tenant is at law responsible, in amounts required by the Landlord and any mortgagee but in no event less than TWO MILLION DOLLARS per occurrence;

		(ii) all risks direct damage insurance including flood and earthquake, covering all chattels, stock-in-trade and fixtures and all leasehold improvements, installations, additions and partitions made by the Tenant or by the Landlord at the Tenant’s expense, in an amount equal to the full replacement value thereof;

		(iii) Business interruption insurance on all risks including flood and earthquake in such amount necessary to fully compensate the Tenant from interference with or prevention of access to the Premises or the Building; and

		(iv) such other forms of insurance as may be reasonably required by the Landlord and any mortgagee from time to time.

		All such insurance shall be with insurers licensed to do business in the Province of Ontario with the Landlord as an additional named insured and containing a cross liability clause and a severability of interest clause.

		Evidence of insurance and renewals thereof shall be delivered to the Landlord prior to the Commencement Date of the Term. All policies covering the property or business interruption shall also contain a waiver of subrogation and all policies shall contain a provision prohibiting the insurer from snaking alterations that reduce or restrict coverage or cancelling the coverage without first giving the Landlord thirty (30) days’ prior written notice thereof by registered mall. If the Tenant falls to take out and maintain in force such insurance, the Landlord may do so and pay the premiums and the Tenant shall pay the Landlord the amount of such premiums forthwith upon demand. All insurance proceeds on leasehold improvements shall be payable to the Landlord, If both the Landlord and the Tenant have claims to be indemnified under any such insurance, the indemnity shall be applied first to the settlement of the Landlord’s claim and the balance, if any, to the settlement of the Tenant’s claim.

		It is agreed and understood that if any glass is damaged, the Tenant will replace same at his own cost with the same type, quality and thickness.

Registration		4.29 the Tenant agreed with the Landlord not to register this Lease or any notice thereof.

Liens on Alterations, etc.		4.30 the Tenant shall duly pay for all labour performed, material or equipment furnished in, about or with reference to any buildings erections, repairs, alterations, installations or improvements which may be made or done from time to time in or upon the Premises and every part thereof at all times free and clear of all liens in respect thereof;

Tenant’s Certificates		4.31 The Tenant agrees that it will at any time and from time to time upon not less than ten (10) days prior notice execute and deliver to the Landlord a statement in writing certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the modifications and that the same is in full force and effect as modified), the amount of the annual rental then being paid hereunder, the dates to which the same, by installment or otherwise and other charges hereunder have been paid, and whether or not there is any existing default on the part of the Landlord of which the Tenant has notice.

Relocation		4.32 The Tenant agrees that notwithstanding anything herein contained the Landlord shall have the right at any time and from time to time to change the location of the Premises as set forth in Article 1 hereof and Schedule ”A” attached hereto comparable Premises in the Building, and upon such change being made the new Premises shall be deemed to be the Premises for all purposes under this Lease. If the Landlord exercises its right to relocate the Tenant hereunder, after the date upon which the Landlord gives notice to the Tenant that the Leased Premises are ready for installation of the Tenant’s improvements the Landlord shall pay the reasonable relocation expenses incurred by the Tenant in moving from the original Premises to the relocated Premises.

PROVISOS OF RE-ENTRY		5.01 (a) Provision for re-entry by the Landlord on non-payment of rent or non-performance of covenants, positive or negative.

Remedies of Landlord		(b) If the Tenant shall fall to make any payment or payments of rent or any part thereof or fail to pay Landlord any sum or sums which are to be paid under this Lease to the Landlord or otherwise and such default shall continue for fifteen (15) days or if the Tenant shall fail to perform any other covenants, conditions or agreements contained herein and shall allow such default to continue for fifteen (15) days after written notice thereof then (i) the term hereby granted may, at the option of the Landlord expressed in writing, be terminated subject to any other rights or remedies available to the Landlord and the term and estate hereby vested in the Tenant and any and all other rights of the Tenant hereunder shall thereupon immediately cease and expire as full and with like effect as if the entire term herein provided for had elapsed and rent and any other payment for which the Tenant is liable under this Lease shall be apportioned and paid in full to the date of such termination together with reasonable expenses of the Landlord, including, but not restricted to, legal costs, solicitors’ fees and brokerage and expenses of keeping the Premises in good order and of preparing the Premises for reletting, and the Tenant shall immediately deliver up possession of the Premises to the Landlord and (ii) the Landlord, in addition to all other rights which it may have under this Lease or otherwise, shall have the right to enter the Premises as the agent of the Tenant without being liable for any prosecution therefore and to relet the Premises as the agent of the Tenant for whatever term and under whatever conditions the Landlord may seem advisable and to receive the rent therefore and as agent of the Tenant to take possession of any chattels, furniture or other property on the Premises and to lease the same or sell the same at public or private sale with or without notice and to apply the proceeds of such lease or sale and any rent derived from reletting the Premises on account of the rent or other charges under this Lease.

LANDLORD’S COVENANTS		6.00 The Landlord covenants with the Tenant as follows: -

Quiet Enjoyment		6.01 for quiet enjoyment;

Insurance		6.02 the Landlord covenants to insure the Building (not including the Tenant’s leasehold improvements, fixtures, equipment or contents) against fire and extended perils, and to carry public liability and property damage insurance, with such coverages and in such amounts usually carried by prudent owners of similar buildings, and as required by the~ Landlord’s mortgagees, the cost of which shall be included in Additional Rent.

MUTUAL COVENANTS		7.00 It is hereby mutually agreed between the Landlord and the Tenant as follows: -

Net Rent		7.01 it is the intention of this lease that the rental hereby reserved shall be net to the Landlord and clear of all taxes (except the Landlord’s income taxes), costs and charges arising from or relating to the Premises and that the Tenant shall pay all charges, impositions, expenses of every nature and kind relating to the Premises and the Tenant covenants with the Landlord accordingly.

Landlord May Perform Tenant’s Obligation		7.02 if the Tenant shall fail to perform or cause to be performed eachand every one of the covenants and obligations of the Tenant in this Lease contained, the Landlord shall have the right (but shall not be obligated) to perform or cause the same to be performed and to do or cause to be done such things as may be necessary or incidental thereto (including without limiting the generality of the foregoing, the right to make repairs, installations, and expend money) and all payments, expenses, charges, fees and disbursements incurred or paid by or on behalf of the Landlord in respect thereof shall be paid by the Tenant to the Landlord forthwith upon demand and shall be recoverable in the same manner as rent in arrears;

Default		7.03 if the Tenant shall be in default of any of its covenants and obligations hereunder other than its covenant to pay rent or amounts collectible hereunder as rent reserved and in arrears the Landlord may give notice to the Tenant upon such default coming to the attention of the Landlord and in such notice the Landlord shall with reasonable particularity state the nature of the default and require the same to be remedied and the Tenant shall have thirty (30) days (or such longer period as may be reasonably necessary bearing in mind the nature of the default) from the receipt of such notice within which to remedy such default. If after the expiration of the times above limited the Tenant remains in default the Landlord may thereupon at its option either by itself or its lawfully authorized agent enter and re-enter into and upon the Premises or any part thereof in the name of the whole and have again, repossess and enjoy its former estate free and clear of all claims of the Tenant.

Forfeiture		7.04 provided that during the Term any of the goods and chattels of the Tenant shall be at any time seized or taken in execution or in attachment by any creditor of the Tenant, or, if the Tenant is a corporation, any proceeding shall be taken or order shall be made for the winding-up of the Tenant, or for the surrender or cancellation of, or the forfeiture of the charter of the Tenant, or if a writ of execution shall issue against the goods or chattels of the Tenant, or if the Tenant shall execute any chattel mortgage or bill of sale of any of its goods or chattels otherwise than in the ordinary course of business, or if the Tenant shall make an assignment for the benefit of creditors, or becoming bankrupt or insolvent shall take the benefit of any Act that may be in force for bankrupt or insolvent debtors or shall abandon or attempt to abandon the Premises, or to sell or dispose of its goods and chattels so that there would not in the event of such sale or disposal be in the opinion of the Landlord a sufficient distress on the Premises, or if the Premises shall without the consent in writing of the Landlord become and remain vacant or be not used for a period of thirty (30) days or be used by

		any persons other than such as are entitled to use them under the terms of this Lease or for any purpose other than that for which the same are hereby demised then, and in every such case, the then current month’s rent, together with the rent for the three months next ensuing and taxes for the then current year (to be reckoned at the rate for the next preceding year in case the rate shall not have been fixed for the then current year), shall immediately become due and payable and the Term shall, at the option of the Landlord, forthwith become forfeited and determined and in every of the above cases, such taxes shall be recoverable by the Landlord in the same way as rent in arrears;

Landlords Liability		7.05 the Landlord shall not be liable nor responsible in any way for any personal or consequential damages of any nature whatsoever that may be suffered or sustained by the Tenant or any employee, invitee, or licensee of the Tenant or any other person who may be upon the Premises and, save as to damage caused by the negligence of the Landlord, its employees, servants, or agents, the Landlord shall not be responsible in anyway for any injury to any person or for any loss of or damage to any property belonging to the Tenant, or to employees, invitees, or licensees of the Tenant while such person or property is in, on or about the Premises, including (without limiting the generality of the foregoing) any loss of or damage to any such property caused by theft or breakage or steam, water, rain or snow which may leak into, issue or flow from any part of the Premises or any adjacent or neighbouring land or Premises or from the water, steam, or drainage pipes or plumbing works of the same or from any other place or from any damage caused by or attributable to the condition or arrangement of any electric or other wiring nor for any damage caused by anything done or omitted to be done by any other tenant of the Landlord. The Tenant covenants to save harmless and indemnify the Landlord from and against all liability, loss, costs, claims or demands made against it in respect of any injuries or damage referred to in this paragraph except such as may arise out of the negligence of the Landlord, its employees, agents or servants;

Waiver		7.06 any waiver by the Landlord of the breach of any covenant, condition, or proviso herein shall not be taken to be a waiver of the breach of any other covenant, condition or proviso herein nor a continuing waiver of the same breach of the same covenant, condition or proviso or of the subsequent compliance with the said covenants, conditions or provisos and all of the rights and remedies of the Landlord shall be deemed to be cumulative and not alternative;

Fire, etc.		7.07 if and whenever during the Term the Building shall be destroyed or damaged by fire, lightning or tempest, or any of the perils for which the Landlord and the Tenant are insured, then and in every such event:

		(i) if the damage or destruction is such that the Premises are rendered wholly unfit for occupancy or are unsafe to use and occupy and if in either event the damage, in the opinion of the Landlord, to be given to the Tenant within ten (10) days of the happening of such damage or destruction,

		cannot be repaired with reasonable diligence within one hundred and twenty (120) days from the happening of such damage or destruction, then either the Landlord or the Tenant may within five (5) days next succeeding the giving of the Landlord’s opinion as aforesaid terminate this Lease by giving to the other notice in writing of such termination, in which event this Lease and the Term shall cease and be at an end as of the date of such damage or destruction and the rent (including additional rent) and all other payments for which the Tenant is liable under the terms of this Lease shall be apportioned and paid in full to the date of such damage or destruction. In the event that neither the Landlord nor the Tenant terminates this Lease as aforesaid, then the rent hereby reserved shall abate from the date of the happening of the damage until the damage shall be made good to the extent of enabling the Tenant to use and occupy the Premises, and the Landlord shall repair the damage with all reasonable speed;

		(ii) if the damage be such that the Premises are wholly unfit for occupancy, or are unsafe to use or occupy but if in either event the damage, in the opinion of the Landlord, to be given to the Tenant within ten (10) days from the happening of such damage, can be repaired with reasonable diligence within one hundred and twenty (120) days from the happening of such damage then the rent hereby reserved shall abate from the happening of such damage until the damage shall be made good to the extent of enabling the Tenant to use and occupy the Premises and the Landlord shall repair the damage with all reasonable speed;

Tenant’s Parking		7.08 the Tenant and the employees of the Tenant shall park their automobiles or trucks only in areas designated by the Landlord as parking areas and further, the Landlord and person authorized by the Landlord shall have the right without unduly interfering with the Tenant’s business to relocate or alter parking areas, driveways and access ramps from time to time as the Landlord may desire including the reduction, increase or change of the size and location thereof provided always that access to and from the Premises are at all times available;

Collection Charges		7.09 in the event it shall be necessary to distrain or commence an action for the collection of rent herein reserved or any portion thereof, or any other amount payable by the Tenant under this Lease or if it shall be necessary to collect the same upon the demand of a solicitor or in the event that it becomes necessary for the Landlord to prepare and serve a notice requiring the Tenant to remedy a breach of any of the covenants herein, the Tenant shall pay to the Landlord on demand all costs, charges and expenses (including solicitor’s and counsel fees) incurred by the Landlord incidental thereto or in connection therewith and such costs, charges and expenses shall be recoverable in the same way as rent in arrears;

Acceptance of Premises		7.10 the Tenant has leased the Premises after examining the site and the Building or the plans and specifications relating to the same and unless the Tenant furnishes the Landlord with a notice in writing specifying any defect in the construction of the Premises or otherwise within ten (10) days

		after taking possession thereof, such taking of possession shall be conclusive evidence as against the Tenant that at the time thereof the Premises were in good order and satisfactory condition;

Lien		7.11 As security for the due payment by the Tenant of the Rent reserved hereunder and the performance by the Tenant of all covenants, agreements, provisoes and conditions of the Tenant to be performed hereunder, including but not limited to any work conducted by the Landlord the cost of which is amortized or repayable by the Tenant, pursuant to the terms hereof, the Tenant hereby grants to the Landlord a first lien and charge on all goods, chattels, trade fixtures, furniture, equipment and inventory of the Tenant situate on, in or about the Leased Premises or elsewhere. Such lien and charge shall constitute a security agreement within the meaning of The Personal Property Security Act (Ontario) and on default of the Tenant hereunder the Landlord shall have, in addition to any other rights and remedies it may be entitled to under this Lease or otherwise, all the rights and remedies of a secured party under The Personal Property Security Act.

Overholding		7.12 if, at the expiration or other termination of this lease, the Tenant shall remain in possession of the Premises, with or without the consent of the Landlord and without any further written agreement, a tenancy from year to year shall not be created by implication of law, but the Tenant shall be deemed to be a monthly tenant only, at a monthly rental equal to one and one-quarter (1.25) times the rent payable in respect of the last month prior to the expiration of the Term, payable in advance on the first day of each month and subject in all other respects to the terms of this lease.

Amounts Owing as Additional Rent		7.13 all amounts owed by the Tenant to the Landlord hereunder, other than rent, shall be deemed to be additional rent and shall, unless otherwise provided herein, be paid within fifteen (15) days from the date of demand by the Landlord;

Interest on Amounts Owing		7.14 all amounts owed by the Tenant to the Landlord hereunder, including rent, shall bear interest from the date due until the date paid at the rate equivalent to two per cent (2%) above the prime rate of interest in effect on the date of payment at The Royal Bank of Canada, Toronto or at the maximum legal rate of interest, whichever is lower.

Notices		7.15 All notices or other documents required or which may be given under this Lease shall be in writing, duly signed by the party giving such notice and delivered or transmitted by registered or certified mail, telegram, facsimile, or telex addressed to the Landlord at 40 King Street West, Suite 4803, P.O. Box 303, Toronto, Ontario, M5H 3Y2, facsimile (416) 360-7082;

		(i) and to the Tenant at the Demised Premises;

		(ii) or to any solicitor or firm of solicitors for the time being acting for the Landlord or the Tenant. Any notice or document so given shall be deemed to have been received on the fourth business day following the date of mailing, if sent by mail, but shall be deemed to have been received on the same day if transmitted by facsimile and on the next business day if transmitted by telex or telegram. In the event of interruption of the postal system by labour strife, such notice shall be sent by telex, facsimile or telegram or delivered. Any party may from time to time by notice given as provided above change its address for the service;

Subordination		7.16 this Lease is subject and subordinate to all ground and underlying leases and to any charges on or charges from time to time created by the Landlord by mortgage or charge on the Premises or the Building and the Tenant shall from time to time as requested by the Landlord execute all documents and give such further assurances as maybe reasonably required to postpone its rights and privileges to the holder of any such leases charges or mortgages;

Entire Agreement		7.17 the Tenant acknowledges that there are no covenants representations, warranties, agreements or conditions expressed or implied, collateral or otherwise forming part of or in any way affecting or relating to this Lease save as expressly set out in this Lease and that this Lease constitutes the entire agreement between the Landlord and the Tenant and may not be modified except as herein explicitly provided or except by subsequent agreement in writing of equal formality hereto executed by the Landlord and the Tenant.

Change of Control Tenant		7.18 if the Tenant is a corporation and, if, by sale or other dispositions, the control thereof changes at any time during the Term, then, at the option of the Landlord, this lease may be cancelled by the Landlord upon giving sixty (60) days’ prior written notice to the Tenant of its intention to do so.

Adjustments		7.19 upon the termination of this Lease by effluxion of time, or the sooner determination of this Lease, other than sooner determination resulting from any of the matters referred to in paragraph 7.04 hereof, the Landlord shall pay to the Tenant the value of any unexpired insurance upon the Building and other improvements on the Premises and the parties shall pro rata adjust, apportion and allow between themselves all items of taxes, water rates and other matters of a similar nature to the intent and purpose that the Tenant shall bear the burden thereof until it shall deliver up possession of the Premises on the termination of the lease or at the expiry of any holding over but not afterwards.

Exproportion		7.20 if the Premises or any part thereof shall be expropriated for a public or quasi public purpose the Landlord shall be entitled, at its option, forthwith to terminate this Lease by giving notice in writing to the Tenant and thereupon rent and all other payments payable by the Tenant hereunder shall be apportioned and paid to the date of termination and the Tenant shall

		surrender and yield up possession of the Premises to the Landlord and the Landlord shall solely be entitled to any award payable on any such expropriation free of any apportionment in favour of the Tenant;

Force Majeure		7.21 wherever in this Lease it is provided that anything be done or performed within a specified period such provisions are subject to strikes, lockouts, availability of materials, government rules, regulations or order or any other conditions (other than financial conditions) beyond the reasonable control of the Landlord or the Tenant, as the case may be, and where any such conditions arise the period of time for the Landlord or Tenant to comply with the specific obligation hereunder shall be extended to the extent of the period of delay caused by any of the foregoing events;

Covenants: Severability		7.22 the Landlord and the Tenant agree that all of the provisions of this Lease are to be construed as \covenants and agreements as though the words importing such covenants and agreement were used in each separate section hereof. Should any provision or provisions of this Lease be illegal or not enforceable it or they shall be considered separate or severable from this Lease and its remaining provisions shall remain in force and be binding upon the parties hereto as though the said provision or provisions had never been included;

Titles		7.23 the titles of articles and the captions of sections appearing in this Lease have been inserted as a matter of convenience and for reference only and in no way define, limit or enlarge the scope or meaning of this Lease or of any provisions thereof;

Successors and Assigns		7.24 this indenture and everything herein contained shall enure to the benefit of and be binding upon the respective heirs, executors, administrators, successors, assigns and other legal representatives, as the case may be, of each and every of the parties hereto, subject to the granting of consent by the Landlord as provided in paragraph 4.21 hereof to any assignment or sublease and every reference herein to any party hereto shall include the heirs, executors, administrators, successors, assigns and other legal representatives of suchparty, and where there is more than one tenant or there is a female party or a corporation the provisions hereof shall be read with all grammatical changes thereby rendered necessary and all covenants shall be deemed joint and several.

Smoking		7.25 Smoking is prohibited in the common areas of the building, Premises and the Landlord’s business park. Smoking includes the carrying of a lighted cigar, cigarette, pipe or other lighted smoking equipment. Tenant’s shall ensure their employees, servants, contractors, invitees and licensees abide by this rule at all times.

Confidentiality		7.26 The Tenant agrees that the contents of this Lease are to be kept confidential and that it will not disclose the terms hereof to any other parties. The financial terms of the Lease shall not be revealed by the Tenant.

Personal		7.27 It is understood and agreed that any, and all inducements, Landlord’s Work, Options, or rights contained or referred to herein are personal to KILIAN MANUFACTURING, a division of INGERSOLL-RAND CANADA INC. (the ‘Tenant’) and are non-assignable, and not transferrable to any assignee or sub-lessee without the prior written approval of the Landlord.

SCHEDULES		8.01 Schedule ”A”, “B”, “C”, “D”,”E” and “F”(attached hereto) form part of this Lease.

IN WITNESS WHEREOF the parties hereto have executed this Lease on the date first above written.

		KILIAN MANUFACTURING, a division of
		INGERSOLL-RAND CANADA, INC.


		By:
		Name:	C.H. Engeland
		Title:	Secretary – Ingersoll-Rand Canada, Inc.

		And:
		Name:	J.D. Heal
		Title:	V.P. – Sales & Marketing – Construction & Mining Group
		We have authority to bind the corporation.


		SLOUGH ESTATES CANADA LIMITED


		By:
		Name:
		Title:

		And:
		Name:
		Title:
		We have authority to bind the corporation.

SCHEDULE “A”

SITE PLAN

SCHEDULE “B”

FIXTURES

A complete list of Landlord’s Fixtures located on or in the Premises will be taken on occupancy and forwarded to Tenant for verification and approval and one agreed upon and initialized by both parties will be attached as Schedule ”B” to this Lease.

SCHEDULE “C”

FLOOR PLAN

To follow for Tenant’s approval.

SCHEDULE “D”

LANDLORD’S WORK

The Landlord agrees to commence the following Landlord’s Work once this Lease has been fully executed. The items listed below or any new construction that is included under the Landlord’s Work shall be constructed in accordance with the Landlord’s Building Standard Finishes. Such work to be completed on or before occupancy.

1. Ensure that all the Building’s mechanical systems including but not limited to heating, air conditioning, hydro, electrical, sprinkler, plumbing, lighting, shipping doors, truck levellers, and security systems (if owned by the Landlord) are in good repair and free of defects.

2, Ensure that the roof is in good repair and free of defects.

3. Steam clean the office area carpet.

4. Paint office area walls in a colour to be chosen by the Tenant.

5. Ensure Building is broomswept clean and free of all debris.

6 The Landlord to tile the supervisors office and women’s enlarged warehouse washroom.

7. The Landlord to enlarge and add three (3) additional sinks, and one (1) toilet to the women’s warehouse washroom.

8. The Landlord to connect the enlarged women’s warehouse washroom to the newly created women’s locker room;.

9. The Landlord to block up the two (2) windows in the women’s locker room and relocate the said two (2) windows to the to the supervisors office;

10. The Landlord to erect a drywall partition in P.O. #1 to create a new P.O. # 1 and P.O. # 2.

11. The Landlord to install a new entrance with door into the main electrical room from the warehouse area;

12 CONDITION ON COMMENCEMENT OF LANDLORD’S WORK

The Tenant acknowledges that the Landlord will not commence the above noted work until the Lease has been fully executed.

13. DELAY OF LANDLORD’S WORK BY TENANT

Should the Landlord’s Work be delayed due to any delays caused by the Tenant then the Lease and the Rent Free Period shall commence and be in full force and effect upon the dates as set out in the Proposal and Lease Agreement.

14. UNAVOIDABLE DELAY OF LANDLORD’S WORK

For the purpose of this Lease ‘Unavoidable Delay” shall be defined as a delay caused by fire, strike or other casualty or contingency beyond the reasonable control of the Landlord who is by reason thereof, delayed in the performance of its obligations under the lease in circumstances where it is not within the reasonable control of such party to avoid such delay (but does not include lack of funds or other financial causes of delay), the Landlord shall use all reasonable efforts to subsequently complete the work as set out herein by the commencement date of the Lease. If the Landlord is unavoidably delayed then the date to complete the work shall be automatically extended by the length of such delay and the commencement date and the Rent Free Period as set out in the Proposal and the Lease Agreement shall also be extended accordingly.

15. EXTRA COSTS RE USE

It is agreed and understood that any additional construction costs incurred to meet municipal regulations and building codes due to the Tenant’s specific use and occupancy shall be at the Tenant’s expense.

16. CONSTRUCTION COST

The Tenant agrees to contribute towards the cost of the Landlord’s Work by way of payment in the amount of TWO THOUSAND and 00/100 Dollars ($2,000.00) payable upon completion and receipt of invoice.

CWO 727- KILIAN MANUFACTURING a division of -
INGERSOLL-RAND OF CANADA INC.
Building 703

SCHEDULE “E”

RULES AND REGULATIONS

The Tenant covenants and agrees that the Rules and Regulations shall in all respect be observed and performed by the Tenant, its employees and agents and to the extent the Tenant can require the same, by its invitees and others over whom the Landlord shall have available to it, all remedies provided in this Lease and all other legal remedies available at law or in equity upon a breach of the Rules and Regulations by the Tenant. The Landlord may terminate this Lease forthwith upon such breach if, after Notice of such breach, the Tenant fails to remedy or commence to remedy such breach within ten (10) days or fails to diligently continue to rectify such breach. The Tenant acknowledges that the Landlord has no obligation and there shall be no liability upon the Landlord for non-enforcement of the Rules and Regulations. The Rules and Regulations shall include, without limitation, the following:

(1) Animals or Birds:

No animals or birds shall be kept in the Leased Premises.

(2) Care of Interior and Exterior (if applicable) of Leased Premises:

The Tenant shall keep the Interior and Exterior (if applicable) of the Leased Premises clean, orderly and tidy. The Tenant shall keep perishable items properly refrigerated. The Tenant shall deposit all debris, trash and refuse in areas, at. times and in such a manner as the Landlord shall reasonably delegate.

(3) No one shall use the Premises for sleeping quarters.

(4) The Tenant shall observe strict care not to allow windows admitting light into the Premises to be left opened or remain open so as to admit rain or snow, or so as to interfere with the heating of the Premises or the air conditioning of the Premises or of the Building. The Tenant will be responsible for any injury caused to the property of other Tenants or to the property of the Landlord by failure on the part of the Tenant to observe this rule.

(5) Furniture, effects and supplies shall not be taken into or removed from the Premises except at such time or in the normal course of business and in such manner as may be previously approved by the Landlord.

(6) The Landlord shall have the right to require all persons entering and leaving the Building at hours other than normal business hours, which are defined as between 8.00 am and 6.00 pm, Monday through Friday, to identify themselves to a watchman or security guard (where applicable).

(7) Electrical and Communications Wiring:

The Landlord shall direct the location and manner of installation of all wiring and equipment in the Leased Premises. There shall be no boring, cutting or installation of

telephone, telegraphic, electric or other wiring without the written consent of the Landlord.

(8) Loading, Unloading, Delivery (if applicable):

Deliveries, shipments and all loading and unloading of items to and from the Premises by means of such doorways, corridors and in such manner as the Landlord shall reasonably designate.

(9) Use of Elevator (if applicable):

Elevators shall not be used without the prior approval of the Landlord for the movement of furniture, freight, supplies or equipment and shall be left in clean condition following use.

(10) Obstruction of Plumbing and Washroom Facilities and Common Areas

The Tenant agrees that it will not use or permit its employees, agents or invitees to use the plumbing or washroom facilities of the Leased Premises or common areas for any purpose other than that for which they are constructed.

(11) Overloading of floors (if applicable):

The Tenant shall not permit any floor of the Leased Premises to be loaded to more than (250) pounds per square foot live load. All safes and other heavy objects liable to injure or destroy any part of the Leased premises or the Park development shall be moved at such times, by such means and by such persons as the Landlord shall reasonably direct. Upon the termination of this lease and the Tenant shall forthwith inform the Landlord in writing of the combination of all locks, safes and vaults in or on the Leased Premises.

(12) Restriction on Dangerous Materials:

The Tenant shall not keep, use, sell or offer for sale in the Leased Premises, anything of a dangerous, inflammable or explosive nature.

(13) Signs, Advertising and Displays:

The Tenant shall not, in or about the Leased Premises without the written consent of the Landlord, erect exterior signs, install window or door signs, affix window or door lettering, erect awnings or canopies or display advertising media or devices which may be seen or heard outside the Leased Premises. The Tenant shall remove forthwith all signs, lettering, awnings, canopies and displays which are found by the Landlord to be objectionable. The Tenant shall indemnify and save harmless the Landlord from all claims, demands, loss or damage to any person or property arising out of or in any way caused by the erection, maintenance or removal of any sign or other installation erected or installed on or about the exterior of the Leased Premises. The Tenant shall at its own expense, maintain in good condition and repair all such signs, lettering, awnings, canopies and displays, and shall observe and comply with all requirements of any

competent authority regarding the erection and maintenance of signs including the payment of license or other fees.

(14) Use of Entrances, etc.:

The sidewalks, entrances, lobbies, elevators, stairways and corridors of the Premises, Building or Park Development shall not be obstructed by the Tenant or used by it for any other, purpose than for ingress and egress to and from. the Leased Premises and the Tenant shall not place or allow to be placed in any such areas any waste paper, dust, garbage, refuse or anything whatever that shall tend to make such areas appear clean or untidy.

(15) Refuse/Garbage:

All garbage disposal containers used by the Tenant must be covered, locked and maintained by the Tenant at the Tenant’s expense in such a manner as not to cause refuse or litter of any nature within the vicinity of the container or which will cause discomfort or damage to neighbouring tenants. The container must be emptied daily by the Tenant at his own expense (where applicable). Should the Tenant not observe the aforesaid provision then the Landlord will have the right to remedy and clean up will all costs to be charged to the Tenant. The Landlord and any person authorized by the Landlord shall have the right without unduly interfering with the Tenant’s business to relocate garbage disposal containers within the lands owned or managed by the Landlord.

The Tenant shall comply, at its own expense with all federal, provincial and municipal, fire, sanitary and safety laws and regulations and by-laws pertaining to the use of the Demised Premises and surrounding area.

(16) Odours

The Tenant shall not permit or allow odours, vapours, steam, water, vibrations, noises or other undesirable effects to emanate from the Premises or any equipment or installation therein which, in the Landlord’s opinion, are objectionable or cause any interference with the safety, comfort or convenience of the Building by the Landlord or any occupants thereof or their invitees.

(17) Pest Control:

The Tenant shall, at its own expense and at such reasonable intervals as the Landlord may require, use such pest extermination contractors for the Leased Premises as the Landlord may direct. If the Tenant fails to exercise such pest control measures as so directed by the Landlord, the Landlord shall have the right, at its option, to exercise such pest control measures for the Leased Premises, and one hundred and fifteen percent of the cost thereof shall be payable forthwith by the Tenant upon demand by the Landlord.

SCHEDULE “F”

OPTION TO EXTEND

Provided that; the Tenant has duly and regularly paid all net rent, additional rent and any other sums required to be paid pursuant to the Lease and within the times and the manner set out in the Lease; and the Tenant has duly and regularly observed and performed each and every one of the terms, covenants and conditions contained in the Lease on its part to be observed and performed and within the times and in the manner set out in the Lease; and the Tenant has given written notice to the Landlord at least six (6) months and no earlier than twelve (12) months prior to the expiration of the initial Term that it is to exercising the within Option to Extend; and so long as the Tenant is KILIAN MANUFACTURING, a division of INGERSOLL-RAND CANADA INC. and is in itself in possession of and conducting its business in the whole of the Premises in accordance with the terms of the Lease; then the Landlord will grant the Tenant the right to extend the Term of the Lease for the Premises on an ‘as is’ basis for a further period of Five (5) years (the “Extended Term”) commencing upon the expiration of the initial Term on such terms and conditions as are contained in the Lease, save and except for:

(a) the Tenant shall not be entitled to the benefit of or to receive any leasehold improvement allowance or any payments by the Landlord to the Tenant as set out in the Original Lease;

(b) the Net Rent for the Extended Term will be based on the Landlord’s prevailing rental rates for similar space in a similar area at the time of exercise by the Tenant of the within option to extend, but in no event shall such Net Rent be less than the Tenant’s Net Rent for the initial Term;

If the Tenant fails to give the appropriate notice within the time limit set out herein for extending the Term, then this Extension Option shall be null and void and of no further force or effect.

If the Tenant gives such appropriate notice within the time limit set out herein for extending the Term, it shall forthwith execute all documentation submitted by the Landlord prior to the commencement of the Extension period.

EXTENSION AGREEMENT

THIS AGREEMENT made as of the 22nd day of June, 1999.

B E T W E E N

JER QUEENSWAY, U.L.C.

c/o 201 Consumers Road, Suite 106

North York, Ontario

M2J 4G8

(hereinafter referred to as the “Landlord”)

OF THE FIRST PART

- and -

KILIAN MANUFACTURING,

a division of INGERSOLL-RAND CANADA INC.

413 Horner Avenue

Etobicoke, Ontario

M8W 4W3

(hereinafter referred to as the “Tenant”)

OF THE SECOND PART

WHEREAS by a Lease dated the 4th day of November, 1994, Slough Estates Canada Limited, as previous landlord did demise and lease unto the Tenant the lands and premises therein described and known municipally as 413 Horner Avenue, Building 703, Etobicoke, Ontario (the “Premises”) for a term of five (5) years commencing on the 1st day of November, 1994 (hereinafter called the “Original Lease”);

AND WHEREAS the Original Lease was assumed by the Landlord upon receiving title to the Premises on or about the 14th day of August, 1997;

AND WHEREAS by extension letter dated the 1st day of June, 1999 and accepted by the Tenant on the 1st day of June, 1999, the Landlord and the Tenant agreed to further extend and renew the term of the Original Lease until the 31st day of October, 2004;

NOW THEREFORE THIS AGREEMENT WITNESSETH as follows:

1. The Landlord hereby demises and extends the Term of the Original Lease unto to the Tenant for the lands and premises described in the Original Lease for a further five (5) year term commencing on the 1st day of November, 1999.

2. For the period commencing November 1, 1999 to October 31, 2000, annual basic rent in the amount of ONE HUNDRED AND FIVE THOUSAND, FOUR HUNDRED AN]) TWENTY DOLLARS ($105,420.00) of lawful money of Canada payable in advance in equal monthly installments of EIGHT THOUSAND, SEVEN HUNDRED AND EIGHTY-FIVE DOLLARS ($8,785.00) each on the 1st day of each and every month, and additional rental as set out in the lease. The foregoing rental is based upon an annual rate of $3.50 per square foot times the Rentable Area of the Premises of 30,120 square feet.

3. For the period commencing November 1, 2000 to October 31, 2001, annual basic rent in the amount of ONE HUNDRED AND TWELVE THOUSAND, NINE HUNDRED AND FIFTY DOLLARS ($112,950.00) of lawful money of Canada payable in advance in equal monthly installments of NINE THOUSAND, FOUR HUNDRED AND TWELVE DOLLARS AND FIFTY CENTS ($9,412.50) each on the 1st day of each and every month, and additional rental as set out in the lease. The foregoing rental is based upon an annual rate of $3.75 per square foot times the Rentable Area of the Premises of 30,120 square feet.

4. For the period commencing November 1, 2001 to October 31, 2002, annual basic rent in the amount of ONE HUNDRED AND TWENTY THOUSAND, FOUR HUNDRED AND EIGHTY DOLLARS ($120,480.00) of lawful money of Canada payable in advance in equal monthly installments of TEN THOUSAND, FORTY DOLLARS ($10,040.00) each on the 1st day of each and every month, and additional rental as set out in the lease. The foregoing rental is based upon an annual rate of $4.00 per square foot times the Rentable Area of the Premises of 30,120 square feet.

5. For the period commencing November 1, 2002 to October 31, 2003, annual basic rent in the amount of ONE HUNDRED AND TWENTY-EIGHT THOUSAND, AND TEN DOLLARS ($128,010.00) of lawful money of Canada payable in advance in equal monthly installments of TEN THOUSAND, SIX HUNDRED AND SIXTY-SEVEN DOLLARS AND FIFTY CENTS ($10,667.50) each on the 1st day of each and every month, and additional rental as set out in the lease. The foregoing rental is based upon an annual rate of $4.25 per square foot times the Rentable Area of the Premises of 30,120 square feet.

6. For the period commencing November 1, 2003 to October 31, 2004, annual basic rent in the amount of ONE HUNDRED AND THIRTY-FIVE THOUSAND, FIVE HUNDRED AND FORTY DOLLARS ($135,540.00) of lawful money of Canada payable in advance in equal monthly installments of ELEVEN THOUSAND, TWO HUNDRED AND NINETY-FIVE DOLLARS ($11,295.00) each on the 1st day of each and every month, and additional rental as set out in the lease. The foregoing rental is based upon an annual rate of $4.50 per square foot times the Rentable Area of the Premises of 30,120 square feet.

Subject to and with the benefits of the same covenants on the part of the Landlord and the Tenant respectively and the like provisos and conditions in all respects (including the provisos for reentry) as are contained in the Original Lease, save as herein otherwise provided and save for any Landlord’s Work, Tenant inducements of any kind Extension Option, Expansion Option and the Landlord’s covenant for extension, if any.

7. It is agreed and understood that in consideration of the Landlord continuing to hold the deposit in the amount of ELEVEN THOUSAND, SIX HUNDRED AND FOUR DOLLARS AND FIFTEEN CENTS ($11,604.15) in accordance with the Original Lease dated November 4, 1994, that this deposit shall be applied toward the last months rental of the Extended Term of the Original Lease.

8. It is understood and agreed that all options or rights contained or referred to herein are personal to KILIAN MANUFACTURING, a division of INGERSOLL-RAND CANADA INC., and are non-assignable, or transferable to any assignee or sub-lessee without the prior written approval of the Landlord.

9. The Landlord and the Tenant mutually covenant and agree that they will respectively perform and observe the several covenants, provisos and stipulations expressed in the Original Lease including, without limitations, the obligations to repair, to repair according to notice in writing and to leave the Premises in good repair as fully as if the said covenants, provisos and stipulations had been repeated herein in full with such modifications only as are necessary to make them applicable to this Extension Agreement and as if the Term of this Extension Agreement had commenced on the commencement

date of the Original Lease.

IN WITNESS WHEREOF the parties hereto have caused their hands and seals to be hereunto affixed under the hands of their proper officers duly authorized in that behalf.

		The Corporate Seal of J.E.R. QUEENSWAY, U.L.C.


		By:
		Authorized Signing Officer


		By:
		Authorized Signing Officer


		I/We authority to bind the corporation.

		The Corporate Seal of KILIAN MANUFACTURING, a division of INGERSOLL-RAND CANADA INC. was hereunto affixed in the presence of


		By:
		Authorized Signing Officer


		By:
		Authorized Signing Officer


		I/We authority to bind the corporation.

EX-10.11 41 a2155511zex-10_11.htm EXHIBIT 10-11

Exhibit 10.11

Shenzen Lease Agreement

(English Language Summary)

Name of Lease:	Shui Hing Manufacturing Factory Lease Agreement

Parties to Lease:	Warner Shui Hing Limited and Bogang Economic Development Company

Date of Lease:	January 1, 2003

Termination Date of Lease:	December 31, 2005

Location/ Property Leased:	Songshan Industrial Zone, Bogang Village. Shajing Town, Baoan District Shenzhen City Guangdong Province PRC

Size of Space:	Factory Area:	4,742.3 m2
	Dormitory Area:	1,952.3 m2

Payments:	$ 7,832 per month

Right to Terminate:	Termination upon 3 months notice to landlord and payment of charges until end of rental period.

Option to Extend:	Upon the agreement of the parties the lease may be extended upon terms similar to those contained herein. Warner Shui Hing Limited shall have a first right to enter into negotiations with the landlord for the leased space.

Transfer or Assignment:	Not addressed in the lease.

Uses allowed:	Operation of a machining factory and assembly of mechanical and plastic parts.

EX-10.12 42 a2155511zex-10_12.htm EXHIBIT 10-12

Exhibit 10.12

Garching Lease Agreement

(English Language Summary)

Name of Lease:		Mietvertrag für gewerbliche Räume

Parties to Lease:		Stieber GmbH and Schmidt Lacke GmbH

Date of Lease:		August 5, 1981

Termination Date of Lease:		December 31, 2006

Location/ Property Leased:		Dieselstrabe 14 85748 Garching Germany

Size of Space:		34,944 Sq. Ft

Payments:		$25,839 per month

Right to Terminate:		Either party may terminate on 12 months notice prior to the end of a calendar year.

Option to Extend:		None listed.

Transfer or Assignment:		No right to transfer or assign.

Uses allowed:		Production of industrial products and operation of a warehouse.

EX-10.13 43 a2155511zex-10_13.htm EXHIBIT 10-13

Exhibit 10.13

Heidelberg Lease Agreement

(English Language Summary)

Name of Lease:		Immobilien Mietvertrag (Object 1, Object 2)

Parties to Lease:		Stieber GmbH and Carola Grundstücksverwaltungsgesellschft GmbH

Date of Lease:		December 21, 1984

Termination Date of Lease:		December 31, 2013

Location/ Property Leased:		Hatschekstrabe 36 69126 Heidelberg Germany

Size of Space:		49,249 Sq. Ft.

Payments:		$14,635 per month

Right to Terminate:		None, other than breach of agreement.

Option to Extend:		May be extended upon the agreement of the parties.

Transfer or Assignment:		No right to transfer or assign.

Uses allowed:		Production of industrial products and operation of a warehouse.

Additional Terms:		Mr Bohnenstiel and/or Mr. Bandel (former owners of Stieber GmbH) have an option to buy Carola Grundstücksverwaltungs Gmbh which may only be exercised in the calendar year 2005.

EX-10.14 44 a2155511zex-10_14.htm EXHIBIT 10.14

Exhibit 10.14

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of January 6, 2005 (the “Effective Date”), is entered into among Altra Holdings, Inc., a Delaware corporation (“Holdings”), Altra Industrial Motion, Inc., a Delaware corporation and wholly-owned subsidiary of Holdings (the “Company”), and Michael L. Hurt (“Executive”). Certain capitalized terms used in this Agreement are defined in Section 12 hereof.

Holdings, the Company and Executive desire to enter into this agreement relating to Executive’s employment by the Company.

The parties hereto agree as follows:

“Affiliate” means, with respect to any Person, any Person controlling, controlled by or under common control with such Person.

“Board” means, the Board of Directors of the Company.

“Cause” means (i) Executive’s material breach of the terms of any agreement between Executive and Holdings or the Company; (ii) Executive’s willful failure or refusal to perform material duties as Chief Executive Officer; (iii) Executive’s willful insubordination or disregard of the legal directives of the Board which are not inconsistent with the scope, ethics and nature of Executive’s duties and responsibilities; (iv) Executive’s engaging in misconduct which has a material adverse impact on the reputation, business, business relationships or financial condition of Holdings or the Company; (v) Executive’s commission of an act of fraud or embezzlement against Holdings or the Company or any of their Subsidiaries; or (vi) any conviction of, or plea of guilty or nolo contendere by, Executive with respect to a felony (other than a traffic violation), a crime involving moral turpitude, fraud or misrepresentation; provided, however, that Cause shall not be deemed to exist under any of clauses (i), (ii) or (iii) unless Executive has been given reasonably detailed written notice of the grounds for such Cause and Executive has not effected a cure within twenty (20) days of the date of receipt of such notice.

“Disability” means a determination by independent competent medical authority (selected by the Board) that Executive is unable to perform his duties under this Agreement and in all reasonable medical likelihood such inability will continue for a period in excess of 120 days (whether or not consecutive) in any 365 day period.

“Genstar” means Genstar Capital, L.P. and each of its Affiliates.

“Good Reason” means any of the following: (i) without Executive’s express written consent, any change in Executives job title, any change in Executive’s reporting relationships or a significant reduction of Executive’s duties, position or responsibilities relative to Executive’s duties, position or responsibilities in effect immediately prior to such reduction, or Executive’s removal from such position, duties and responsibilities, unless he is provided with comparable duties, position and responsibilities; (ii) a material reduction by the Company in the kind or level of employee benefits to which he is entitled immediately prior to such reduction with the result that Executive’s overall benefits package is significantly reduced; or (iii) the Company’s failure to cause Executive’s employment agreement and its obligations thereunder to be expressly assumed by the Company’s successor.

“Person” means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity (other than a corporation) if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association or other business entity. For purposes hereof, references to a “Subsidiary” of any Person shall be given effect only at such times that such Person has one or more Subsidiaries, and, unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of the Company.

	To Holdings:

	Altra Holdings, Inc.
	c/o Genstar Capital, L.P.
	Four Embarcadero Center, Suite 1900
	San Francisco, CA 94111-4191
	Attention:	Jean-Pierre L. Conte
	Telecopy No.:	(415) 834-2383

	To the Company:

	Altra Industrial Motion, Inc.
	c/o Genstar Capital, L.P.
	Four Embarcadero Center, Suite 1900
	San Francisco, CA 94111-4191
	Attention:	Jean-Pierre L. Conte
	Telecopy No.:	(415) 834-2383

	To Executive:

	Michael L. Hurt
	58 Cornertown Road
	Chambersburg, PA 17201
	Tel: (717) 267-3904

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when personally delivered, one business day after sent by reputable overnight courier service, five days after deposit in the U.S. mail (or when actually received, if earlier), or at such time as it is transmitted via facsimile, with receipt confirmed.

* * * *

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.

	ALTRA INDUSTRIAL MOTION, INC.

	By:
	Name: Jean-Pierre L. Conte
	Title: Chairman of the Board


	ALTRA HOLDINGS, INC.

	By:
	Name: Jean-Pierre L. Conte
	Title: Chairman of the Board


	EXECUTIVE


	Michael L. Hurt

[M. Hurt Employment Agreement Signature Page]

EX-10.15 45 a2155511zex-10_15.htm EXHIBIT 10.15

Exhibit 10.15

Draft 1/4/2005

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of January , 2005 (the “Effective Date”), is entered into among Altra Holdings, Inc., a Delaware corporation (“Holdings”), Altra Industrial Motion, Inc., a Delaware corporation and wholly-owned subsidiary of Holdings (the “Company”), and Carl Christenson (“Executive”). Certain capitalized terms used in this Agreement are defined in Section 12 hereof.

Holdings, the Company and Executive desire to enter into this agreement relating to Executive’s employment by the Company.

The parties hereto agree as follows:

“Affiliate” means, with respect to any Person, any Person controlling, controlled by or under common control with such Person.

“Board” means the Board of Directors of the Company.

“Cause” means (i) Executive’s material breach of the terms of any agreement between Executive and Holdings or the Company; (ii) Executive’s willful failure or refusal to perform material duties as President and Chief Operating Officer; (iii) Executive’s willful insubordination or disregard of the legal directives of the Board or the Chief Executive Officer which are not inconsistent with the scope, ethics and nature of Executive’s duties and responsibilities; (iv) Executive’s engaging in misconduct which has a material adverse impact on the reputation, business, business relationships or financial condition of Holdings or the Company; (v) Executive’s commission of an act of fraud or embezzlement against Holdings or the Company or any of their Subsidiaries; or (vi) any conviction of, or plea of guilty or nolo contendere by, Executive with respect to a felony (other than a traffic violation), a crime involving moral turpitude, fraud or misrepresentation; provided, however, that Cause shall not be deemed to exist under any of clauses (i), (ii) or (iii) unless Executive has been given reasonably detailed written notice of the grounds for such Cause and Executive has not effected a cure within twenty (20) days of the date of receipt of such notice.

“Genstar” means Genstar Capital, L.P. and each of its Affiliates.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (ii) if a limited liability company, partnership, association or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity (other than a corporation) if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association or other business entity. For purposes hereof, references to a “Subsidiary” of any Person shall be given effect only at such times that such Person has one or more Subsidiaries, and, unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of the Company.

	To Holdings or the Company:

	Altra Holdings, Inc. / Altra Industrial Motion Inc.
	c/o Genstar Capital, L.P.
	Four Embarcadero Center, Suite 1900
	San Francisco, CA 94111-4191
	Attention:	Jean-Pierre L. Conte
	Telecopy No.:	(415) 834-2383

	and

	Altra Industrial Motion, Inc.
	14 Hayward Street
	Quincy, MA 02171
	Attention:	Michael L. Hurt, Chief Executive Officer
	Telecopy No.:	()

	with a copy to:

	Weil, Gotshal & Manges LLP
	201 Redwood Shores Parkway
	Redwood Shores, CA 94065
	Attention:	Craig W. Adas
	Telecopy No.:	(650) 802-3100

	To Executive:

	Carl Christenson
	15524 Oak Ridge Drive
	Spring Lake, MI 49456

	Telecopy No.:	( ) -

	With a copy to:

	Saul Ewing LLP
	Penn National Insurance Plaza
	2 North Second Street, 7th Floor
	Harrisburg, PA 17101
	Attention:	Catherine Walters
	Telecopy No.:	(717) 238-4622

* * * *

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.

	ALTRA INDUSTRIAL MOTION, INC.


	By:
		Michael L. Hurt
		Chief Executive Officer


	ALTRA HOLDINGS, INC.


	By:
		Michael L. Hurt
		Chief Executive Officer


	EXECUTIVE



	Carl Christenson

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

EX-10.16 46 a2155511zex-10_16.htm EXHIBIT 10.16

Exhibit 10.16

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of January 12, 2005 (the “Effective Date”), is entered into among Altra Holdings, Inc., a Delaware corporation (“Holdings”), Altra Industrial Motion, Inc., a Delaware corporation and wholly-owned subsidiary of Holdings (the “Company”), and David A. Wall (“Executive”). Certain capitalized terms used in this Agreement are defined in Section 12 hereof.

Holdings, the Company and Executive desire to enter into this agreement relating to Executive’s employment by the Company.

The parties hereto agree as follows:

“Affiliate” means, with respect to any Person, any Person controlling, controlled by or under common control with such Person.

“Board” means the Board of Directors of the Company.

“Cause” means (i) Executive’s material breach of the terms of any agreement between Executive and Holdings or the Company; (ii) Executive’s willful failure or refusal to perform material duties as Chief Financial Officer; (iii) Executive’s willful insubordination or disregard of the legal directives of the Board or the Chief Executive Officer which are not inconsistent with the scope, ethics and nature of Executive’s duties and responsibilities; (iv) Executive’s engaging in misconduct which has a material adverse impact on the reputation, business, business relationships or financial condition of Holdings or the Company; (v) Executive’s commission of an act of fraud or embezzlement against Holdings or the Company or any of their Subsidiaries; or (vi) any conviction of, or plea of guilty or nolo contendere by, Executive with respect to a felony (other than a traffic violation), a crime involving moral turpitude, fraud or misrepresentation; provided, however, that Cause shall not be deemed to exist under any of clauses (i), (ii) or (iii) unless Executive has been given reasonably detailed written notice of the grounds for such Cause and Executive has not effected a cure within twenty (20) days of the date of receipt of such notice.

“Genstar” means Genstar Capital, L.P. and each of its Affiliates.

kind or level of employee benefits to which he is entitled immediately prior to such reduction with the result that Executive’s overall benefits package is significantly reduced; or (iii) the Company’s failure to cause Executive’s employment agreement and its obligations thereunder to be expressly assumed by the Company’s successor.

	To Holdings or the Company:

	Altra Holdings, Inc. / Altra Industrial Motion Inc.
	c/o Genstar Capital, L.P.
	Four Embarcadero Center, Suite 1900
	San Francisco, CA 94111-4191
	Attention:	Jean-Pierre L. Conte
	Telecopy No.:	(415) 834-2383

	and

	Altra Industrial Motion, Inc.
	14 Hayward Street
	Quincy, MA 02171
	Attention:	Michael L. Hurt, Chief Executive Officer
	Telecopy No.:	( )

	with a copy to:

	Weil, Gotshal & Manges LLP
	201 Redwood Shores Parkway
	Redwood Shores, CA 94065
	Attention:	Craig W. Adas
	Telecopy No.:	(650) 802-3100

	To Executive:

	David A. Wall


	Telecopy No.:	( ) -

* * * *

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.

	ALTRA INDUSTRIAL MOTION, INC.


	By:
		Michael L. Hurt
		Chief Executive Officer


	ALTRA HOLDINGS, INC.


	By:
		Michael L. Hurt
		Chief Executive Officer


	EXECUTIVE


	David A. Wall

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

EX-10.17 47 a2155511zex-10_17.htm EXHIBIT 10.17

Exhibit 10.17

TRANSITION AGREEMENT

This Transition Agreement (the “Agreement”) is being entered into this day of May, 2004 (the “Effective Date”) by and between [insert name] and Colfax Corporation, its subsidiaries, and affiliate companies (collectively, the “Company”).

1. Except as otherwise provided herein, the term of this Agreement will be from the Effective Date until one year following the closing date of the sale (the “Closing Date”) of the Colfax Power Transmission Group (the “Business”) of the Company, unless earlier terminated as provided below.

2. During the term of this Agreement, you will continue to devote your entire business skill, time, and effort diligently to the affairs of the Business and you will perform all such duties, and otherwise conduct yourself, in a manner reasonably determined to promote the best interests of the Company.

3. Notwithstanding any other provision of this Agreement, your eligibility to receive from the Company any Severance Benefit under this Agreement is expressly contingent on the sale of all of the Business (whether in one transaction or several) or the sale of the business unit within the Business for which you provide services to a Buyer (or Buyers) on or before June 30, 2005. If neither all of the Business nor the business unit within the Business for which you provide services is sold on or before June 30, 2005, you shall not be eligible to receive any Severance Benefit pursuant to this Agreement and this Agreement shall terminate on July 1, 2005. For the purposes of this Agreement, a sale shall not be deemed to occur until the transaction closes.

4. Severance Benefit Eligibility:

(a) In addition to the requirements in Section 3 above, you will be eligible for a Severance Benefit only if: you satisfy the requirements of Sections 5 and 6 herein; and if during the first year of your employment with the Buyer, your employment is terminated by the Buyer other than for Cause or you voluntarily resign for Good Reason.

(b) If you are eligible for a Severance Benefit, it will be calculated as set forth in Schedule A and will be paid to you in the form of salary continuation in accordance with the Company’s regular payroll practices and procedures. The Severance Benefit also includes the following: if you elect to continue your health care and dental coverage through COBRA or any similar state law and provided you continue to authorize the required employee contributions for your share of the premiums, the Company will continue to pay its share of your premiums (at the same level of coverage as you have upon termination of employment) during the period of salary continuation.

(c) If payable, the Severance Benefit will not be included in determining the amount of any benefits under any of the Company’s qualified or nonqualified employee benefit plans in which you may be a participant.

(d) Any Severance Benefit will cease immediately upon your securing employment after the end of your employment with the Company. You agree that if you do

secure such employment during the period in which are receiving Severance Benefit, you shall immediately notify the Company.

For purposes of this Agreement, the term “Cause” means: (i) your conviction (including without limitation by plea of guilty or no contest) of a felony or your conviction (including without limitation by plea of guilty or no contest) of a misdemeanor crime involving fraud, dishonesty, or moral turpitude; (ii) your willful misconduct or negligence in the performance of your duties; (iii) your breach of this Agreement or any other agreement between you and the Company; or (iv) any breach of your fiduciary duty or act of fraud, dishonesty, disloyalty, or embezzlement by you.

For purposes of this Agreement, the term “Good Reason” means: (i) a material diminution in your job responsibilities; (ii) a material reduction in your compensation or bonus opportunities; or (iii) a change (without your consent) in your principal location of employment that is more than 30 miles from the current principal location of your employment.

5. To be eligible for a Severance Benefit, you must execute and deliver to the Company a General Release of Claims (“General Release”) in the form attached hereto as Exhibit 1 or in such other form as the Company reasonably determines is appropriate. You understand that you shall sign the General Release no earlier than the first business day after the last day of your employment.

6. In further consideration for the benefits described in Section 4 above, you agree to the following:

a. Return of Property; Intellectual Property Rights. Upon your termination of employment for any reason with the Company or at any other time requested by the Company, you will return all property owned by the Company or containing information relating to the Company’s business or customers, including files, documents, data and records (whether on paper, tapes, disks, or in any other form, electronic or otherwise), office equipment, credit cards, and employee identification cards. You acknowledge that the Company is the rightful owner of any programs, ideas, inventions, discoveries, copyright material, or trademarks that you may have originated or developed, or assisted in originating or developing, during your period of employment with the Company, where any such origination or development involved the use of Company time or resources, or the exercise of your responsibilities for or on behalf of the Company. You will at all times, both before and after termination of employment, cooperate with the Company in executing and delivering documents and taking any other actions that are necessary or requested by the Company to assist the Company in patenting, copyrighting, or registering any programs, ideas, inventions, discoveries, copyright material, or trademarks, and to vest title thereto in the Company.

b. Proprietary and Confidential Information. You will at all times both during and after your employment with the Company preserve the confidentiality of all proprietary or confidential information and trade secrets of the Company, except to the extent that disclosure of such information is legally required, authorized in writing by the Company, or necessary in the performance of your duties on behalf of the Company. The phrase “proprietary or confidential information” includes without limitation information that has not been disclosed to the public or that has been disclosed to the

public wrongfully or in breach of the disclosing party’s obligations to the Company and that is treated as confidential within the business of the Company, such as strategic or tactical business plans; financial data; ideas, processes, methods, techniques, systems, patented or copyrighted information, models, devices, programs, computer software, or related information; documents relating to regulatory matters and correspondence with governmental entities; information concerning any past, pending, or threatened legal dispute; pricing and cost data; reports and analyses of business prospects; business transactions which are contemplated or planned; research data; personnel information and data; identities or lists of or information regarding users, purchasers, or customers of any of the Company’s products or services; and other confidential matters pertaining to or known by the Company, including confidential information of a third party which you know or should know the Company is bound to protect.

c. Interference with Business Relations. During the period of your employment with the Company except in accordance with your duties and responsibilities on behalf of the Company, and for a period ending 12 months following your termination of employment from the Company for any reason, you, without the prior written consent of the Company, will not directly or indirectly on behalf of yourself or any other entity: (i) recruit, solicit, or hire any employee of the Company (or any person employed by the Company within six months of the recruitment, solicitation, or hiring) for employment or for retention as a consultant or service provider; (ii) solicit or induce, or in any manner attempt to solicit or induce, any client, customer, or prospective client or customer of the Company to cease being, or not to become, a customer of the Company, or to divert any business of such customer or prospective customer or client from the Company; or (iii) otherwise interfere with, disrupt, or attempt to interfere with or disrupt, the relationship, contractual or otherwise, between the Company and any of its customers, clients, prospective customers or clients, suppliers, consultants, or employees.

d. Other Agreements and Policies. The obligations imposed on you by this Section 6 are in addition to, and not in lieu of, any and all other policies or agreements of the Company regarding the subject matter of the foregoing obligations.

e. You acknowledge that the Company’s customers and prospective customers are national and international in scope and that the terms of these covenants are necessary and reasonable and will not prevent you from earning a livelihood. You agree that your agreement to these covenants is a material inducement to the Company to enter into this Agreement and to make possible to you the benefits provided in this Agreement. You further agree that money damages may be insufficient as remedy for your breach of these covenants. Accordingly, you agree that, in addition to any other relief that may be available, the Company shall be entitled to specifically enforce these covenants, including without limitation by means of temporary, preliminary, and permanent injunctive relief. You also agree that should any court of competent jurisdiction find any portion of these covenants to be unenforceable for any reason, that the Court shall modify such portion so that it is enforceable and then enforce the covenant as modified. You further agree that if the Court is unwilling or unable to make such a modification, then it shall sever the unenforceable provision and shall enforce the remaining portions of these covenants as fully as possible so as to achieve the original intent of these covenants.

7. The Company will endeavor to have the Buyer assume this Agreement. If the Buyer assumes the Agreement, the Company will assign all of its rights and obligations under this Agreement to the Buyer; and if the Company makes such an assignment, all references in this Agreement (not including this Section 7) to “Company” will be deemed to refer to the Buyer on and after the effective date of such assignment, unless the context clearly requires a contrary meaning. The Company may otherwise assign its rights and obligations under this Agreement to another entity with or without your consent. Upon any assumption or assignment provided in this Section 7, the Company shall owe no further obligation to you under this Agreement. You may not assign your rights and obligations under this Agreement.

8. The payment of any benefits under this Agreement will be in lieu of, and not in addition to, any separation or severance benefits to which you may otherwise be entitled from the Company. In addition, no provision of this Agreement will require the Company to provide you with any payment, benefit, or grant that duplicates any payment, benefit, or grant that you are entitled to receive under any Company compensation or benefit plan or other agreement or arrangement.

9. Nothing in this Agreement shall be construed as a right to continued employment with the Company and nothing in this Agreement limits the Company’s right to terminate your employment with the Company at any time (including prior to the Closing Date) with or without cause or notice. The term of this Agreement shall end on your last day of employment if the term has not already ended.

10. Failure to insist upon strict compliance with any of the terms, covenants, or conditions of this Agreement will not be deemed a waiver of such term, covenant, or condition, nor will any waiver or relinquishment of any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such right or power at any other time or times.

11. The Company may withhold from any benefits payable under this Agreement all taxes, deductions, and withholding that the Company determines to be required pursuant to any law, regulation, or ruling. However, it is your obligation to pay all required taxes on any amounts provided under this Agreement, regardless of whether withholding is required.

12. Except to the extent otherwise required by law, you will not disclose, in whole or in part, any of the terms of this Agreement. However, you may disclose the terms of this Agreement to your spouse and to your legal or financial adviser, provided that you take all reasonable measures to assure that he or she does not disclose the terms of this Agreement to a third party except as otherwise required by law. In addition, notwithstanding anything in this paragraph to the contrary, you may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions and other tax analyses) that are provided to you relating to such tax treatment and tax structure.

13. Dispute Resolution.

a. The parties agree that, except for any claims pursuant to Section 6 of this Agreement, they shall submit to arbitration and resolve in accordance with the procedures specified in this Section 13 any and all disputes arising from or relating to this Agreement. The parties further agree that the arbitration process agreed upon herein shall be the exclusive means for resolving all disputes made subject to arbitration herein.

b. Notwithstanding any other choice of law provisions in the Agreement, the interpretation and enforcement of the arbitration provisions of this Agreement shall be governed exclusively by the Federal Arbitration Act (“FAA”), and shall otherwise he governed by the law of the Commonwealth of Virginia.

c. These arbitration provisions shall not prevent the Company from obtaining injunctive relief from a court of competent jurisdiction to enforce any obligations of the Agreement; including without limitation issues concerning covenants not to compete, the use of trade secrets or confidential commercial information (which are excluded from this arbitration process as set forth above), or any other matters for which the Company in its sole discretion may require provisional relief pending a decision on the merits by the arbitrator.

d. Any arbitration hereunder shall be conducted under the Model Employment Procedures of the American Arbitration Association (“AAA”), as modified herein, and, unless otherwise agreed by the parties, shall take place in Richmond, Virginia, at a place designated by the AAA.

e. Each party shall be responsible for its costs (including attorneys’ fees) incurred in any arbitration, and the arbitrator shall not have authority to include all or any portion of said costs (including attorneys’ fees) in an award, regardless of which party prevails. The costs and fees of the arbitrator and of the AAA shall be borne equally by the parties.

f. Except as set forth herein, the arbitrator shall have authority to award any remedy or relief that a court of the Commonwealth of Virginia could grant in conformity to applicable law.

g. With respect to any claims pursuant to Section 6 of this Agreement, such claims too will be governed by the law of the Commonwealth of Virginia, and both you and the Company agree to and submit to the jurisdiction and venue of any state or federal court located in the Commonwealth of Virginia for the resolution of such claims.

14. The provisions contained in this Agreement and within the General Release will each constitute a separate agreement independently supported by good and adequate consideration, and will each be severable from the other provisions of the Agreement and the General Release. If a court of competent jurisdiction or an arbitrator determines that any term, provision, or portion of this Agreement or the General Release is void, illegal, or unenforceable, the other terms, provisions and portions of this Agreement or the General Release will remain in full force and effect, and the terms, provisions, and portions that are determined to be void, illegal, or unenforceable will either be limited so that they will remain in effect to the extent permissible by law, or such court or arbitrator will substitute, to the extent enforceable, provisions similar thereto or other provisions, so as to provide to the Company and you, to the fullest extent permitted by applicable law, the benefits intended by this Agreement and the General Release.

15. The provisions of this Agreement as well as the General Release shall survive the termination of this Agreement according to their terms.

16. This Agreement sets forth the entire understanding of you and the Company with respect to severance or separation pay matters, and supersedes all prior agreements and communications, whether oral or written, between you and the Company regarding such

matters. This Agreement will not be modified except by the written agreement of you and the Company.

17. You acknowledge that you have read and understand this Agreement and execute it voluntarily and without coercion. You further acknowledge that you have been advised in writing of your opportunity to consult with counsel and that you have been given a more than sufficient period of time to consider the terms of this Agreement.

Please indicate your acceptance by signing below.

AGREED TO AND ACCEPTED BY:


Name		Witness



Date



Colfax Corporation

EXHIBIT 1

General Release

In exchange for the Company’s promises (including without limitation eligibility for Severance Benefit) in the Transition Agreement between me and the Colfax Corporation, its subsidiaries, and affiliate companies (collectively, the “Company”) dated May [insert], 2004 (the “Transition Agreement”), I hereby release and discharge the Company, its affiliated companies, and its or their current and former employees, agents, directors, officers, assigns, attorneys, shareholders and all other related persons from any and all suits, charges, demands, causes of action, and/or claims of whatever nature, whether known, unknown, or unforeseen, that I have or may have against the Company arising out of or in any way related to my employment and its termination, the Transition Agreement, or any event, transaction, or matter occurring or existing on or before the date of my signing of this General Release. I agree, without limiting the generality of this release, that this release of claims includes, but is not limited to: any rights or claims that you may have arising out of federal, state, or local employment discrimination laws (such as, for example, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Family and Medical Leave Act, and any similar federal, state, or local statute); claims under the Worker Adjustment Retraining and Notification Act, the Employee Retirement Income Security Act, the Fair Labor Standards Act, or any other applicable federal, state, or local statute relating to payment of wages; claims concerning recruitment, hiring, termination, salary rate, severance pay, retention benefits, wages or benefits due, sick leave, vacation pay, life insurance, group medical insurance, any other fringe benefits of the Company, libel, slander, defamation, intentional or negligent misrepresentation and/or infliction of emotional distress, together with any and all tort, contract, or other claims which might have been asserted by me or on my behalf in any suit, charge, demand, cause of action, or claim against the persons or entities released in this paragraph. I further hereby irrevocably and unconditionally waive any and all rights to recover any relief or damages concerning the suits, charges, demands, causes of action, or claims that are lawfully released in this paragraph. I represent and warrant that I have not previously filed or joined in any such suits, charges, demands, causes of action, or claims against the persons or entities released in this paragraph.

I expressly acknowledge and agree that the foregoing release is a GENERAL RELEASE.

I agree that my decision to execute this General Release is knowing and voluntary and based only on the terms of the Transition Agreement and this General Release, and not on any other promises or representations of any kind whatsoever. I acknowledge that I am being encouraged by the Company to consult with an attorney prior to executing this General Release. I further acknowledge that I have a period of twenty-one (21) days to consider and review this General Release. Moreover, for a period of seven (7) days following my execution of this General Release, I will have the right to revoke it under the Age Discrimination in Employment Act, a federal statute that prohibits employers from discriminating against employees who are age 40 or over. If I elect to revoke this Agreement within this seven-day period, I understand that I must inform the Company by delivering a written notice of revocation to [insert name, title, and address] no later than 11:59 p.m. on the seventh calendar day after I sign the General Release. However, if I elect to exercise this revocation right, I understand that the Company will be relieved of its obligations under the Transition Agreement to make any payments to me, including without limitation any obligation to provide me with the Severance Benefit, and I further understand that the Transition Agreement may be voided in its entirety at the Company’s option. I may, if I wish, elect to sign this General Release prior to the expiration of the 21-day consideration period, and I

agree that if I elect to do so, such election is knowing and voluntary and comes after full opportunity to consult with counsel.

I understand that I shall sign this General Release no earlier than the first business day after the last day of my employment.

Dated:
			[insert employee name]

EX-10.18 48 a2155511zex-10_18.htm EXHIBIT 10.18

Exhibit 10.18

GENSTAR CAPITAL, L.P.
FOUR EMBARCADERO CENTER, SUITE 1900
SAN FRANCISCO, CA 94111

NOVEMBER 30, 2004

Altra Holdings, Inc. and Altra Industrial Motion, Inc.

c/o Genstar Capital Partners III, L.P.

Four Embarcadero Center, Suite 1900

San Francisco, CA 94111-4191

Attention:

Re: Advisory Services Agreement

Ladies and Gentlemen:

This letter serves to confirm our retention by Altra Holdings, Inc. (the “Company” or “you”) to provide management, consulting and financial services to the Company as follows:

1. The Company has retained us, and we hereby agree to accept such retention, to provide to the Company, when and if called upon, certain management, business strategy, consulting and financial services of the type customarily performed by us, including assisting the Company in analyzing, structuring, negotiating and effecting Transactions (as defined below).

2. You agree to pay us the following:

(a) In consideration of services provided by us in connection with the purchase of all of the limited liability company interests of the Company pursuant to that certain LLC Purchase Agreement dated as of October 25, 2004 (the “Purchase Agreement”), by and among Colfax Corporation, a Delaware corporation, Warner Electric Holdings, Inc., a Delaware corporation and the Company and the related financing transactions, the Company shall pay to us a fee of $4,000,000 in cash concurrently with the consummation of the purchase contemplated by the Purchase Agreement (the “Closing Fee”) and reimburse all of our expenses incurred by and on behalf of us in connection with the Purchase Agreement and the transactions contemplated thereby.

(b) In consideration for the services provided by us hereunder, the Company shall pay to us an annual management fee of $1,000,000 (the “Consulting Fee”). The Consulting Fee shall be payable in equal quarterly installments in arrears on the last day of each calendar quarter (i.e., the last day of March, June, September and December of each such year). Such quarterly payments shall be (i) subject to withholding as required by applicable law and (ii) prorated for partial periods based on the actual number of days during such calendar quarter that we are retained hereunder.

(c) In addition to our fees for advisory services, we will separately bill our expenses as incurred. Generally, these expenses include travel costs, document production costs, the reasonable fees and disbursements of our legal counsel tax, financial and other advisors, and other expenses of this type. The Company agrees to reimburse us, upon request made from time to time, for such expenses.

(d) In the event a Transaction (as defined below) is consummated, the Company agrees to pay us an advisory fee equal to 2.0% of the Aggregate Consideration (as defined below) in connection with the Transaction (the “Advisory Fee”). The Advisory Fee will be fully earned on the date of closing of the Transaction and shall be payable by the Company to Genstar in cash on the date of closing.

(e) For purposes of this agreement, a “Transaction” shall mean (i) the consummation of any transaction involving the direct or indirect acquisition by the Company or any of its direct or indirect subsidiaries (whether in one or a series of transactions) of all or a substantial amount of the assets or the capital stock, voting securities or equity interests of another entity, as well as any merger, recapitalization, restructuring or liquidation of another entity by its current owners, a third party or any combination thereof, or any other form of disposition which results in the effective sale, in whole or in part, of the business or operations of the entity to the Company or any of its direct or indirect subsidiaries (a transaction described in this clause (i), an “Acquisition”), or (ii) the consummation of any transaction involving the direct or indirect disposition by the Company or any of its direct or indirect subsidiaries (whether in one or a series of transactions) of all or a substantial amount of its assets, capital stock, voting securities or equity interests, as well as any merger, recapitalization, restructuring or liquidation of the Company or any of its direct or indirect subsidiaries by their current owners, a third party or any combination thereof, or any other form of disposition which results in the effective sale, in whole or in part, of the business or operations of the Company or any of its direct or indirect subsidiaries to another entity (a transaction described in this clause (ii), a “Disposition”).

For purposes of this agreement, “Aggregate Consideration” shall mean (i) in connection with an Acquisition, the total fair market value (at the time of closing) of all consideration (including cash, securities, property, all debt remaining on the acquired entity’s financial statements immediately prior to closing and other indebtedness and obligations assumed by the Company or any of its direct or indirect subsidiaries, as applicable, and any other form of consideration) paid or payable, or otherwise to be distributed, directly or indirectly in connection with the Transaction and (ii) in connection with a Disposition, the total fair market value (at the time of closing) of all consideration (including cash, securities, property, all debt remaining on the Company’s or any of its direct or indirect subsidiaries’ financial statements, as applicable, immediately prior to closing and other indebtedness and obligations assumed by the purchaser and any other form of consideration) paid or payable, or otherwise to be distributed, directly or indirectly in connection with the Transaction.

3. The terms of this agreement are effective beginning as of the date first set forth above. This agreement shall continue in effect from year to year unless amended or terminated by the mutual consent of the parties hereto. Our services hereunder may also be terminated with or without cause by us at any time and without liability or continuing obligation to you or us, except for any compensation earned and expenses incurred by us to the date of termination and provided that Attachment A (and any other provisions that by their nature continue to have effect following any such termination) will remain operative regardless of any such termination.

4. The Company agrees to indemnify us and certain other Indemnified Persons (as defined therein) as provided on Attachment A, which forms an integral part of this agreement.

5. Any advice or opinions provided by us may not be disclosed or referred to publicly or to any third party (other than the Company’s legal, tax, financial or other advisors), except in accordance with our prior written consent.

6. We shall act as an independent contractor, with duties solely to the Company. The provisions hereof shall inure to the benefit of and shall be binding upon the parties hereto and their respective successors and assigns. Nothing in this agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and assigns, and, to the extent expressly set forth herein, the Indemnified Persons, any rights or remedies under or by reason of this agreement. Without limiting the generality of the foregoing, the parties acknowledge that nothing in this agreement, expressed or implied, is intended to confer on any present or future holders of any securities of the Company or its subsidiaries or affiliates, or any present or future creditor of the Company or its subsidiaries or affiliates, any rights or remedies under or by reason of this agreement or any performance hereunder.

7. This agreement shall be governed by and construed in accordance with the laws of New York, without regard to principles of conflicts of law.

8. If any term or provision of this agreement or the application thereof shall, in any jurisdiction and to any extent, be invalid and unenforceable, such term or provision shall be ineffective, as to such jurisdiction, solely to the extent of such invalidity or unenforceability without rendering invalid or unenforceable any remaining terms or provisions hereof or affecting the validity or enforceability of such term or provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereto waive any provision of law that renders any term or provision of this agreement invalid or unenforceable in any respect.

9. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) RELATED TO OR ARISING OUT OF OUR RETENTION PURSUANT TO, OR OUR PERFORMANCE OF THE SERVICES CONTEMPLATED BY THIS AGREEMENT.

10. This agreement may be amended, modified or supplemented only by a written instrument executed by both parties. The section and other headings contained in this agreement

are for reference purposes only and shall not affect the meaning or interpretation of this agreement. This agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

11. Notwithstanding any provision hereof, none of our obligations or our affiliates’ obligations under this agreement shall be an obligation of our or our affiliates’ officers, directors, members, limited partners or general partners (or of any officer, director, member, limited partner or general partner of any member, limited partner or general partner of any of the foregoing entities). Any such liability or obligation arising out of this agreement shall be limited to and satisfied only out of our assets or the assets of our affiliates, as applicable.

* * * * *

If the foregoing sets forth the understanding between us, please so indicate on the enclosed signed copy of this letter in the space provided therefor and return it to us, whereupon this letter shall constitute a binding agreement among us.

	Very truly yours,


	Genstar Capital, L.P.


	By: Genstar Management LLC
	Its: General Partner


	By:
		Name:
		Title:

AGREED TO AND ACCEPTED

Altra Holdings, Inc.


By:
	Name: Michael L. Hurt
	Title: Chief Executive Officer


Altra Industrial Motion, Inc.


By:
	Name: Michael L. Hurt
	Title: Chief Executive Officer

ATTACHMENT A

Terms of Indemnity

This Attachment A is attached to and forms an integral part of that certain letter dated November 30, 2004 from us, Genstar Capital, L.P., to you, Altra Holdings, Inc., regarding our Advisory Services Agreement (the “Engagement Letter”).

In consideration of our agreement to provide you with certain services as set forth in the Engagement Letter, you agree to indemnify and hold harmless us and our affiliates and our and their respective officers, directors, employees, agents and advisors and each other person, if any, controlling us or any of our affiliates (each such person, including ourselves, being an “Indemnified Person”) from and against any losses, claims, damages or liabilities related to, or arising out of, any Transaction (as defined in the Engagement Letter) or our engagement by you pursuant to, and our performance of services as contemplated by, the Engagement Letter and you will reimburse each Indemnified Person for all expenses (including reasonable fees and expenses of counsel) as they are incurred in connection with investigating, preparing, pursuing or defending any action, claim, suit, investigation or proceeding arising therefrom, whether or not pending or threatened and whether or not any Indemnified Person is a party. You also agree that no Indemnified Person shall have any liability (whether direct or indirect, in contract or tort or otherwise) to you or your security holders or creditors related to or arising out of our engagement pursuant to, and our performance of services as contemplated by, the Engagement Letter, except for any such liability for losses, claims, damages or liabilities incurred by you that are finally judicially determined to have resulted from bad faith or gross negligence of such Indemnified Person.

You will not, without our prior written consent, settle, compromise, consent to the entry of judgment in or otherwise seek to terminate any action, claim, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not any Indemnified Person is a party thereto) unless such settlement, compromise, consent or termination includes an irrevocable and unconditional full release of each Indemnified Person from any and all liabilities arising out of such action, claim, suit or proceeding. No Indemnified Person seeking indemnification, reimbursement or contribution under this agreement will, without your prior written consent, settle, compromise, consent to the entry of judgment in or otherwise seek to terminate any action, claim, suit, investigation or proceeding referred to in the preceding paragraph.

If the indemnification provided for in the second paragraph of this Attachment A is judicially determined to be unavailable (other than in accordance with the terms hereof) to an Indemnified Person, in respect of any losses, claims, damages or liabilities referred to herein, then, in lieu of indemnifying such Indemnified Person hereunder, you shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (and expenses relating thereto) (i) in such proportion as is appropriate to reflect the relative benefits to you, on the one hand, and us, on the other hand, of the Transaction (whether or not the Transaction is consummated), or (ii) if (but only if) the allocation provided by clause

(i) above is not available, in such proportion as is appropriate to reflect not only the relative benefits referred to in such clause (i) but also the relative fault of each of you and us, as well as any other relevant equitable considerations, provided however, in no event shall our aggregate contribution to amounts paid or payable hereunder exceed the aggregate amount of fees actually received by us for the specific Transaction or services in question under the Engagement Letter. For purposes of this agreement, the relative benefits to you and us of the Transaction shall be deemed to be in the same proportion as (a) the total value paid or contemplated to be paid or received or contemplated to be received or paid by you or your stockholders, as the case may be, in the Transaction(s) or services that are the subject of the Engagement Letter, whether or not any such Transaction is consummated, bears to (b) the related fees paid or to be paid to us under the Engagement Letter.

The indemnification contained herein in no way limits any other indemnification to which we or our affiliates are entitled pursuant to any other agreements.

The provisions of this Attachment A shall apply to any Transaction and/or services provided under the Engagement Letter and any modifications thereof, and shall remain in full force and effect regardless of any termination or the completion of our services under the Engagement Letter.

AGREED TO AND ACCEPTED:

Altra Holdings, Inc.


By:
Name: Michael L. Hurt
Title: Chief Executive Officer


Altra Industrial Motion, Inc.


By:
	Name: Michael L. Hurt
	Title: Chief Executive Officer

EX-10.19 49 a2155511zex-10_19.htm EXHIBIT 10.19

Exhibit 10.19

ALTRA HOLDINGS, INC.

2004 EQUITY INCENTIVE PLAN

1. Purpose. The Altra Holdings, Inc. 2004 Equity Incentive Plan (the “Plan”) is intended to attract, retain and motivate officers and employees of, consultants to, and non-employee directors providing services to the Altra Holdings, Inc. (the “Company”) and its subsidiaries and affiliates by providing them with appropriate incentives and rewards either through a proprietary interest in the long-term success of the Company or compensation based on their performance in fulfilling their personal responsibilities.

2. Administration.

(a) Committee. The Plan will be administered by a committee (the “Committee”) appointed by the Board of Directors of the Company (the “Board”) from among its members and shall be comprised, unless otherwise determined by the Board, of not less than two (2) members each of whom shall be (i) a “Non-Employee Director” within the meaning of Rule 16b-3(b)(3) (or any successor rule) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (ii) “outside directors” within the meaning of Treasury Regulation Section 1.162-27(e)(3) under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

(b) Authority. The Committee is authorized, subject to the provisions of the Plan, to establish such rules as it deems necessary for the proper administration of the Plan and to make such determinations and interpretations in its sole discretion and to take such action in connection with the Plan and any awards granted hereunder as it deems necessary or advisable, including the right to accelerate the vesting or exerciseability of awards, establish the terms and conditions of awards and cancel awards upon a Change of Control. All determinations and interpretations made by the Committee shall be binding and conclusive on all participants and their legal representatives.

(c) Indemnification. Except in circumstances involving bad faith or willful misconduct of the person acting or failing to act, no member of the Committee and no employee of the Company shall be liable for any act or failure to act hereunder or for any act or failure to act hereunder by any other member or employee or by any agent to whom duties in connection with the administration of this Plan have been delegated. The Company shall indemnify members of the Committee and any agent of the Committee who is an employee of the Company, a subsidiary or an affiliate against any and all liabilities or expenses to which they may be subjected by reason of any act or failure to act with respect to their duties on behalf of the Plan, except in circumstances involving such person’s bad faith or willful misconduct.

(d) Delegation and Advisers. The Committee may delegate to one or more of its members, or to one or more agents, such administrative duties as it may deem advisable. Any person to whom it has delegated duties as aforesaid may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan. The Committee may employ such legal or other counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion or computation received from any such counsel, consultant or agent. Expenses incurred by the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company, or the subsidiary or affiliate whose employees have benefited from the Plan, as determined by the Committee.

3. Participants. Participants will consist of such officers, employees, consultants, and non-employee directors of the Company and its subsidiaries and affiliates as the Committee in its sole discretion determines and whom the Committee may designate from time to time to receive awards under the Plan. Designation of a participant in any year shall not require the Committee to designate such person to receive an award in any other year or, once designated, to receive the same type or amount of award as granted to the participant in any other year. The Committee shall consider such factors as it deems pertinent in selecting participants and in determining the type and amount of their respective awards.

4. Type of Awards. Awards under the Plan may be granted in any one or a combination of: (a) stock options, (b) stock appreciation rights, (c) restricted stock, (d) stock units, and (e) cash. Restricted stock, stock units and cash awards may, as determined by the Committee in its discretion, constitute performance-based awards, as described in Section 11 hereof. Awards granted under the Plan shall be evidenced by agreements (which need not be identical) that provide additional terms and conditions associated with such awards, as determined by the Committee in its sole discretion; provided, however, that in the event of any conflict between the provisions of the Plan and any such agreement, the provisions of the Plan shall prevail.

5. Common Stock Available Under the Plan.

(a) Maximum Shares. The aggregate number of shares of common stock of the Company par value $0.001 (“Shares”) that may be issued under this Plan shall be Four Million (4,000,000) Shares, which may be authorized and unissued or treasury Shares, subject to Section 5(c) hereof and Section 13 hereof (“Maximum Shares”). The maximum number of shares that may be “incentive stock options”, within the meaning of Section 422 of the Code, is 3,500,000 shares (the “ISO Maximum”).

(b) Counting Shares. Shares shall be charged against the Maximum Shares and, if applicable, the ISO Maximum, upon the grant of each award (other than cash awards, stock appreciation rights and stock units to be settled only in cash and performance based awards which are not denominated in common stock) regardless of the vested status of the award, provided, however, that in the case of a stock appreciation

right granted in tandem with a stock option, only the number of Shares subject to the stock option shall be counted.

(c) Additional Shares. Any Shares subject to an outstanding award granted under the Plan which are, for any reason, forfeited, expired, canceled or settled in cash without delivery to the award recipient of Shares, shall again be available for awards under the Plan.

Any Shares delivered to the Company as part or full payment for the exercise or purchase price of an award granted under this Plan or, to the extent the Committee determines that the availability of ISOs under the Plan will not be compromised to satisfy the Company’s withholding obligation with respect to an award granted under this Plan, shall again be available for awards under the Plan.

6. Stock Options.

(a) Generally. Stock options will consist of awards from the Company that will enable the holder to purchase a number of Shares at set terms. Options shall be either incentive stock options or nonqualified stock options. The Committee shall have the authority to grant to any participant stock options (with or without stock appreciation rights). A stock option granted as an incentive stock option shall, to the extent it fails to qualify as an incentive stock option, be treated as a nonqualified option. Each stock option shall be subject to such terms and conditions, including vesting, consistent with the Plan as the Committee may impose from time to time, subject to the following limitations.

(b) Exercise Price. Each stock option granted hereunder shall have a per-Share exercise price of not less than the fair market value (as defined in Section 17 of the Plan) of a Share on the date of grant; provided, however, that if an award is retroactively granted in tandem with or in substitution for other awards made by the Company, the exercise price may be the price on the date of grant of such other award; and provided, further, that if a stock option is granted to a participant upon assumption of or in substitution of an award granted by another entity in connection with a corporate transaction between the Company and the granting entity, such as a merger, consolidation or acquisition, the exercise price may be less than fair market value of a Share on the date the substitute stock option is granted if the aggregate fair market value of the Shares subject to the substitute stock option over the aggregate exercise price of the substitute stock option does not exceed the aggregate fair market value of the shares of the predecessor entity subject to the award being assumed or substituted as of the date immediately preceding the corporate transaction (as determined by the Committee), over the aggregate grant price or exercise price of any such award. Notwithstanding the above, any such grant shall be in accordance with the requirements of Section 409A of the Code and the underlying regulations (hereinafter referred to as “Section 409A”).

(c) Payment of Exercise Price. The option exercise price may be paid in cash or, in the discretion of the Committee, by the delivery of Shares. In the discretion of the

Committee, payment may also be made by delivering a properly executed exercise notice to the Company together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the exercise price. The Committee may prescribe any other method of paying the exercise price that it determines to be consistent with applicable law and the purpose of the Plan.

(d) Exercise Period. Stock options granted under the Plan shall be exercisable to the extent vested, at such time or times and subject to such terms and conditions as shall be determined by the Committee; provided, however, that no stock option shall be exercisable later than ten (10) years after the date it is granted except in the event of a participant’s death within six (6) months prior to such expiration date, in which case, the exercise period of such participant’s stock options may be extended beyond such period but no later than one (1) year after the participant’s death. All stock options shall terminate at such earlier times and upon such conditions or circumstances as the Committee shall in its discretion set forth in such option agreement at the date of grant.

(e) Limitations on Incentive Stock Options. Incentive stock options may be granted only to participants who are employees of the Company or of a “parent corporation” or “subsidiary corporation” (as defined in Sections 424(e) and (f) of the Code, respectively) at the date of grant. The aggregate fair market value (determined as of the time the stock option is granted) of the Shares with respect to which incentive stock options are exercisable for the first time by a participant during any calendar year (under all option plans of the Company and of any parent corporation or subsidiary corporation) shall not exceed one hundred thousand dollars ($100,000). For purposes of the preceding sentence, incentive stock options will be taken into account in the order in which they are granted. The per-Share exercise price of an incentive stock option shall not be less than 100% of the fair market value of the common stock on the date of grant, and no incentive stock option may be exercised later than 10 years after the date it is granted or, in the case of the death of a participant, such longer period as permitted by Section 6(d).

(f) Additional Limitations on Incentive Stock Options for Ten Percent Shareholders. Incentive stock options may not be granted to any participant who, at the time of grant, owns stock possessing (after the application of the attribution rules of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any parent corporation or subsidiary corporation, unless the exercise price of the option is fixed at not less than 110% of the fair market value of the common stock on the date of grant and the exercise of such option is prohibited by its terms after the expiration of five years from the date of grant of such option or, in the case of the death of a participant, such longer period as permitted by Section 6(d).

7. Stock Appreciation Rights.

(a) Generally. The Committee may, in its discretion, grant stock appreciation rights, including a concurrent grant of stock appreciation rights in tandem with any stock

option grant. A “stock appreciation right” means a right to receive a payment in cash, Shares or a combination thereof, in an amount equal to the excess of (i) the fair market value, or other specified valuation, of a specified number of shares of common stock on the date the right is exercised over (ii) the “grant price”. Each stock appreciation right shall be subject to such terms and conditions, including vesting, as the Committee shall impose from time to time.

(b) Grant Price. The grant price per Share referenced in a stock appreciation right shall not be less than the fair market value (as defined in Section 17 of the Plan) of a Share on the date of grant; provided, however, that if an award is retroactively granted in tandem with or in substitution for other awards made by the Company, the grant price may be the price on the date of grant of such other award; and provided, further, that if a stock appreciation right is granted to a participant upon assumption of or in substitution of an award granted by another entity in connection with a corporate transaction between the Company and the granting entity, such as a merger, consolidation or acquisition, the grant price may be less than fair market value of a Share on the date the substitute stock appreciation right is granted if the aggregate fair market value of the Shares subject to the substitute stock appreciation right over the aggregate grant price of the substitute stock appreciation right does not exceed the aggregate fair market value of the Shares of the predecessor entity subject to the award being assumed or substituted as of the date immediately preceding the corporate transaction (as determined by the Committee), over the aggregate grant price or exercise price of any of such award. Notwithstanding the above, any such grant shall be in accordance with the requirements of Section 409A.

(c) Exercise Period. Stock appreciation rights granted under the Plan shall be exercisable at such time or times and subject to such terms and conditions, including vesting, as shall be determined by the Committee; provided, however, that no stock appreciation right shall be exercisable later than ten (10) years after the date it is granted except in the event of a participant’s death within six (6) months prior to such expiration date, in which case, the exercise period of such participant’s stock appreciation rights may be extended beyond such period but no later than one (1) year after the participant’s death. All stock appreciation rights shall terminate at such earlier times and upon such conditions or circumstances as the Committee shall in its discretion set forth in such right at the date of grant.

8. Restricted Stock Awards.

(a) Generally. The Committee may, in its discretion, grant restricted stock awards consisting of common stock issued or transferred to participants with or without other payments therefor, which are subject to transferability restrictions and/or a substantial risk of forfeiture. Restricted stock awards shall be construed as an offer by the Company to the participant to purchase the number of shares of common stock subject to the restricted stock award at the purchase price, if any, established therefor, and shall be subject to acceptance by a participant.

(b) Payment of the Purchase Price. If a restricted stock award requires payment therefor, the purchase price of any shares of common stock subject to a restricted stock award may be paid in any manner authorized by the Committee, which may include any manner authorized under the Plan for the payment of the exercise price of a stock option. Restricted stock awards may also be made in consideration of services rendered to the Company or its subsidiaries or affiliates.

(c) Additional Terms. Restricted stock awards may be subject to such terms and conditions, including vesting, as the Committee determines appropriate, including, without limitation, restrictions on the sale or other disposition of such shares, the right of the Company to reacquire such shares for no consideration upon termination of the participant’s employment within specified periods, and may constitute performance-based awards, as described in Section 11 hereof. The Committee may require the participant to deliver a duly signed stock power, endorsed in blank, relating to the common stock covered by such an award. The Committee may also require that the stock certificates evidencing such shares be held in custody or bear restrictive legends until the restrictions thereon shall have lapsed.

(d) Rights as a Shareholder. Holders of restricted stock awards have the right to receive dividends and to vote the shares; provided, however, unless the Committee or the award agreement provides otherwise, dividends on restricted stock awards shall be held in escrow and shall be payable, at such time as the restrictions on the shares lapse, in either cash, shares or if applicable the kind of property distributed as a dividend or any combination thereof.

9. Stock Units. The Committee may, in its discretion, grant stock units with each such stock unit representing one share of common stock of the Company. Stock units will be credited to a notional account maintained by the Company. Unless the award agreement provides otherwise, each stock unit shall also entitle the holder to an amount equal to the value of dividends paid in respect of one share of common stock of the Company during the period the unit is outstanding, which amount shall also be credited to the notional account. Stock units may be subject to such terms and conditions, including vesting and the time and method of settlement, as the Committee determines appropriate; provided, however, that unless the Committee or the award agreement provides otherwise, stock units shall be settled in shares of common stock. Stock units may constitute performance-based awards, as described in Section 11 hereof.

10. Cash Awards. The Committee may grant awards to be settled in cash; provided, however, that non-employee directors shall not be eligible for cash awards. Cash awards may be subject to such terms and conditions, including vesting, as the Committee determines to be appropriate. Cash awards may constitute performance-based awards, as described in Section 11 hereof. The Company may, in its discretion, permit participants to defer settlement of cash awards, in accordance with the requirements of Section 409A.

11. Performance-Based Awards.

(a) Generally. Any awards granted under the Plan may be granted in a manner such that the awards qualify for the performance-based compensation exemption of Section 162(m) of the Code (“performance-based awards”). As determined by the Committee in its sole discretion, either the granting or vesting of such performance-based awards shall be based on achievement of hurdle rates, growth rates, and/or reductions in one or more business criteria that apply to the individual participant, one or more business units or the Company as a whole.

(b) Business Criteria. The business criteria shall be as follows, individually or in combination: (i) net earnings; (ii) earnings per Share; (iii) net sales growth; (iv) market share; (v) operating profit; (vi) earnings before interest and taxes (EBIT); (vii) earnings before interest, taxes, depreciation and amortization (EBITDA); (viii) gross margin; (ix) expense targets; (x) working capital targets relating to inventory and/or accounts receivable; (xi) operating margin; (xii) return on equity; (xiii) return on assets; (xiv) planning accuracy (as measured by comparing planned results to actual results); (xv) market price per Share; (xvi) total return to stockholders; (xvii) net income; (xviii) pro forma net income; (xix) return on capital; (xx) revenues; (xxi) expenses; (xxii) operating cash flow; (xxiii) net profit margin; (xxiv) employee headcount; (xxv) employee turnover; (xxvi) labor costs; and (xxvii) customer service. In addition, performance-based awards may include comparisons to the performance of other companies, such performance to be measured by one or more of the foregoing business criteria.

(c) Establishment of Performance Goals. With respect to performance-based awards, the Committee shall establish in writing (i) the performance goals applicable to a given period, and such performance goals shall state, in terms of an objective formula or standard, the method for computing the amount of compensation payable to the participant if such performance goals are obtained and (ii) the individual employees or class of employees to which such performance goals apply no later than 90 days after the commencement of such period (but in no event after 25% of such period has elapsed).

(d) Certification of Performance. No performance-based awards shall be payable to or vest with respect to, as the case may be, any participant for a given period until the Committee certifies in writing that the objective performance goals (and any other material terms) applicable to such period have been satisfied.

(e) Modification of Performance-Based Awards. With respect to any awards intended to qualify as performance-based awards, after establishment of a performance goal, the Committee shall not revise such performance goal or increase the amount of compensation payable thereunder (as determined in accordance with Section 162(m) of the Code) upon the attainment of such performance goal. However, the measurement of performance against goals shall exclude the impact of charges for restructurings, discontinued operations, extraordinary items and other unusual or non-recurring items, and the cumulative effects of accounting changes, each as defined by generally accepted accounting principles as identified in the financial statements, notes to the financial statements or management’s discussion or analysis. In accordance with Section 162(m)

of the Code, the Committee may only exercise negative discretion with respect to the amount of a performance-based award.

12. Foreign Laws. The Committee may grant awards to individual participants who are subject to the tax laws of nations other than the United States, which awards may have terms and conditions as determined by the Committee as necessary to comply with applicable foreign laws. The Committee may take any action which it deems advisable to obtain approval of such awards by the appropriate foreign governmental entity; provided, however, that no such awards may be granted pursuant to this Section 12 and no action may be taken which would result in a violation of the Exchange Act, the Code or any other applicable law.

13. Adjustment Provisions; Change of Control.

(a) Adjustment Generally. If there shall be any change in the common stock of the Company, through merger, consolidation, reorganization, recapitalization, stock or special one-time cash dividend, stock split, reverse stock split, split up, spin-off, combination of shares, exchange of shares, dividend in kind or other like change in capital structure or distribution (other than normal cash dividends) to stockholders of the Company, an adjustment shall be made to each outstanding award such that each such award shall thereafter be exercisable for such securities, cash and/or other property as would have been received in respect of the common stock subject to such award had such award been exercised in full immediately prior to such change or distribution, and such an adjustment shall be made successively each time any such change shall occur.

(b) Modification of Awards. In the event of any change or distribution described in subsection (a) above, in order to prevent dilution or enlargement of participants’ rights under the Plan, the Committee will have authority to adjust, in an equitable manner, the number and kind of shares that may be issued under the Plan, the number and kind of shares subject to outstanding awards, the exercise price applicable to outstanding awards, and the fair market value of the common stock and other value determinations applicable to outstanding awards; provided, however, that any such arithmetic adjustment to a performance-based award shall not cause the amount of compensation payable thereunder to be increased from what otherwise would have been due upon attainment of the unadjusted award. Appropriate adjustments may also be made by the Committee in the terms of any awards under the Plan to reflect such changes or distributions and to modify any other terms of outstanding awards on an equitable basis, including modifications of performance targets and changes in the length of performance periods; provided, however, that any such arithmetic adjustment to a performance-based award shall not cause the amount of compensation payable thereunder to be increased from what otherwise would have been due upon attainment of the unadjusted award. In addition, other than with respect to stock options, stock appreciation rights, and other awards intended to constitute performance-based awards, the Committee is authorized to make adjustments to the terms and conditions of, and the criteria included in, awards in recognition of unusual or nonrecurring events affecting the

Company or the financial statements of the Company, or in response to changes in applicable laws, regulations, or accounting principles.

(c) Effect of a Change of Control. Notwithstanding any other provision of this Plan, if there is a Change of Control (as defined in subsection (d) below) of the Company, the Committee may provide at anytime prior to the Change of Control that all then outstanding stock options, stock appreciation rights and stock units and unvested cash awards shall immediately vest and become exercisable and any restrictions on restricted stock awards or stock units shall immediately lapse. In addition, the Committee may provide that all awards held by participants who are at the time of the Change of Control in the service of the Company a subsidiary or affiliate shall remain exercisable for the remainder of their terms notwithstanding any subsequent termination of a participant’s service. All awards shall be subject to the terms of any agreement effecting the Change of Control, which agreement may provide, without limitation, that in lieu of continuing the awards, each stock option and stock appreciation right outstanding hereunder shall terminate within a specified number of days after notice to the holder, and that such holder shall receive, with respect to each share of common stock subject to such stock option or stock appreciation right, an amount equal to the excess of the fair market value of such shares of common stock immediately prior to the occurrence of such Change of Control over the exercise price (or base price) per Share underlying such stock option or stock appreciation right with such amount payable in cash, in one or more kinds of property (including the property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its discretion, shall determine. A provision like the one contained in the preceding sentence shall be inapplicable to a stock option or stock appreciation right granted within 6 months before the occurrence of a Change of Control if the holder of such stock option or stock appreciation right is subject to the reporting requirements of Section 16(a) of the Exchange Act and no exception from liability under Section 16(b) of the Exchange Act is otherwise available to such holder.

(d) Definitions. For purposes of this Section 13, a “Change of Control” of the Company shall be deemed to have occurred upon any of the following events:

(i) Any person(s) acting together which would constitute a “group” for purposes of Section 13(d) of the Exchange Act (other than the Company or any subsidiary) shall “beneficially own” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, at least 25% of the total voting power of all classes of capital stock of the Company entitled to vote generally in the election of the Board;

(ii) Consummation of (A) a plan of complete liquidation of the Company, or (B) a merger or consolidation of the Company (x) in which the Company is not the continuing or surviving corporation (other than a consolidation or merger with a wholly-owned subsidiary of the Company in which all shares of common stock outstanding immediately prior to the effectiveness thereof are changed into or exchanged for common stock of the subsidiary) or (y) pursuant to which the common stock is converted into cash,

securities or other property, except in either case, a consolidation or merger of the Company in which the holders of the common stock immediately prior to the consolidation or merger have, directly or indirectly, at least a majority of the common stock of the continuing or surviving corporation immediately after such consolidation or merger or in which the Board immediately prior the merger or consolidation would, immediately after the merger or consolidation, constitute a majority of the board of directors of the continuing or surviving corporation; or

(iii) The consummation of a sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the assets of the Company.

14. Termination of Service.

(a) Termination (other than for Cause). Unless the Committee or the applicable award agreement provides otherwise, if a participant’s service with the Company or any subsidiary or affiliate terminates for any reason other than for “cause” (which shall have the meaning defined in the applicable award agreement or, in the absence of such definition shall be defined by the Committee).

(i) Stock Options/Stock Appreciation Rights. Except as provided in Section 13(c) hereof, any outstanding stock options and stock appreciation rights shall expire on the earlier of:

(A) the expiration of their term,

(B) 90 days following termination of the participant’s service other than termination of service on account of death or Disability.

provided, however, that a participant (or in the case of the participant’s death or Disability, the participant’s representative) may exercise all or part of the participant’s stock options and stock appreciation rights at any time before the expiration of such stock options following termination of service only to the extent that the stock options and stock appreciation rights are vested on or before the date participant’s service terminates. The balance of the stock options and stock appreciation rights (which are not vested on the date participant’s service terminates) shall lapse when the participant’s service terminates.

If by virtue of this provision, an incentive stock option is not exercised within three (3) months after a participant’s employment terminates, then unless such participant’s employment termination is due to his or her death or Disability (defined for this purpose only as described in Section 22(e)(3) of the Code), the incentive stock option shall be treated as a nonqualified stock option.

(ii) Restricted Stock Awards/Stock Units. All unvested restricted stock awards and stock units shall expire upon termination of service.

(iii) Cash Awards/Performance-Based Awards. All cash awards and performance-based awards shall be forfeited upon termination of service.

(b) Termination of Service (for Cause). All of a participant’s awards (including any exercised stock options for which shares or cash have not been delivered to the participant) shall be cancelled and forfeited immediately on the date of the participant’s termination of service with the Company or any subsidiary if such termination is for cause or cause exists on such date, and the Company shall return to the participant the price (if any) paid for any undelivered shares. Should a participant die at a time when cause exists, all of the participant’s awards (including any exercised stock options for which shares have not been delivered to the participant) shall be cancelled and forfeited immediately as of the date of the participant’s death.

(c) Leave of Absence. For purposes of this Section 14, service shall be deemed to continue while the participant is on a bona fide leave of absence, if such leave was approved by the Company in writing or if continued crediting of service for this purpose is expressly required by the terms of such leave or by applicable law (as determined by the Committee).

15. Nontransferability. Each award granted under the Plan to a participant shall not be transferable except by will or the laws of descent and distribution or as permitted by the Committee to a participant’s spouse, lineal descendants, siblings, parents, heirs, executors, administrators, testamentary trustees, legatees, beneficiaries or a trust for the exclusive benefit of any of the foregoing persons, or to any charitable organizations described in Section 501(c)(3) of the Code, which shall have discretion to permit transferability to third parties under such terms and conditions as it shall determine. In the event of the death of a participant (which for this purpose only shall include any transferee), each stock option or stock appreciation right theretofore granted to him or her shall be exercisable during such period after his or her death as described in Section 14 hereof but unless the Committee or the award agreement provides otherwise, such award shall only be exercisable by the executor or administrator of the estate of the deceased participant or the person or persons to whom the deceased participant’s rights under the stock option or stock appreciation right shall pass by will or the laws of descent and distribution.

16. Other Provisions. The granting of or distribution under any award under the Plan may also be subject to such other provisions (whether or not applicable to the awards of any other participant) as the Committee determines appropriate, including, without limitation, for the forfeiture of, or restrictions on resale or other disposition of, common stock acquired under any form of award, for the acceleration of exercisability or vesting of awards in the event of a Change of Control, for the payment of the value of awards to participants in the event of a Change of Control, or to comply with federal and state securities laws, or understandings or conditions as to the participant’s employment in addition to those specifically provided for under the Plan.

17. Fair Market Value. For purposes of this Plan and any awards awarded hereunder, fair market value per Share as of a particular date shall mean (i) if shares are then listed on a national stock exchange, the closing price per Share on the exchange for the last preceding date on which there was a sale of shares on such exchange, as determined by the Committee, (ii) if shares are not then listed on a national stock exchange but are then traded on an over-the-counter market, the average of the closing bid and asked prices for such shares in such over-the-counter market for the last preceding date on which there was a sale of such shares in such market, as determined by the Committee, or (iii) if shares are not then listed on a national exchange or traded on an over-the-counter market, such value as the Committee in its discretion may in good faith determine; provided that, where such shares are so listed or traded, the Committee may make discretionary determinations where the shares have not been traded for 10 trading days.

18. Withholding. All payments or distributions of awards made pursuant to the Plan shall be net of any amounts required to be withheld pursuant to applicable federal, state and local tax withholding requirements at the minimum statutory withholding rates. If the Company proposes or is required to distribute common stock pursuant to the Plan, it may require the recipient to remit to it or to the corporation that employs such recipient an amount sufficient to satisfy such tax withholding requirements prior to the delivery of any certificates for such common stock. In lieu thereof, the Company or the employing corporation shall have the right to withhold the amount of such taxes from any other sums due or to become due from such corporation to the recipient as the Committee shall prescribe. The Committee may, in its discretion and subject to such rules as it may adopt (including any as may be required to satisfy applicable tax and/or non-tax regulatory requirements), permit an optionee or award or right holder to pay all or a portion of the federal, state and local withholding taxes arising in connection with any award consisting of shares of common stock by electing to have the Company withhold shares of common stock having a fair market value equal to the amount of tax to be withheld, such tax calculated at minimum statutory withholding rates.

19. Tenure. A participant’s right, if any, to continue to serve the Company or any of its subsidiaries or affiliates as an officer, employee, or otherwise, shall not be enlarged or otherwise affected by his or her designation as a participant under the Plan.

20. Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any participant, beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of

such amounts except as expressly set forth in the Plan. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.

21. No Fractional Shares. No fractional shares of common stock shall be issued or delivered pursuant to the Plan or any award. The Committee shall determine whether cash, or awards, or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

22. Duration, Amendment and Termination. No award shall be granted more than 10 years after the Effective Date. The Committee may amend the Plan from time to time or suspend or terminate the Plan at any time. No amendment of the Plan may be made without approval of the stockholders of the Company if the amendment will: (i) increase the aggregate number of shares of common stock that may be delivered through stock options under the Plan; (ii) permit the re-pricing of an award to a lower exercise price, base price or purchase price, as applicable, (including, without limitation, the cancellation of an award followed by a re-grant of that award six (6) months later); (iii) change the types of business criteria on which performance-based awards are to be based under the Plan; (iv) modify the requirements as to eligibility for participation in the Plan; or (v) change the legal entity authorized to make awards under the Plan. Notwithstanding anything contained in this Section 22 or the Plan, the terms of the Plan and any awards granted hereunder may be amended (retrospectively or prospectively) as may be required to comply with the requirements of Section 409A.

23. Governing Law. This Plan, awards granted hereunder and actions taken in connection herewith shall be governed and construed in accordance with the laws of the State of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws).

24. Effective Date. The Plan shall be effective as of November 21, 2004 (the “Effective Date”), provided that the Plan is approved by the stockholders of the Company at an annual meeting or any special meeting of stockholders of the Company within 12 months of the Effective Date, and such approval of stockholders shall be a condition to the right of each participant to receive any awards hereunder. Any awards granted under the Plan prior to such approval of stockholders shall be effective as of the date of grant (unless, with respect to any award, the Committee specifies otherwise at the time of grant), but no such award may be exercised or settled and no restrictions relating to any award may lapse prior to such stockholder approval, and if stockholders fail to approve the Plan as specified hereunder, any such award shall be cancelled.

Section Where Important Terms First Defined or Used

Term		Section

Board		2(a)

Cash Award		10

Cause		14(a)

Change of Control		13(d)

Code		2(a)

Committee		2(a)

Common Stock		5(a)

Company		1

Effective Date		24

Exchange Act		2(a)

Fair Market Value		17

Grant Price		7(a)

Independent Director		2(a)

ISO Maximum		5(a)

Maximum Shares		5(a)

Non-Employee Director		2(a)

Parent Corporation		6(e)

Performance-Based Awards		11(a)

Plan		1

Restricted Stock Award		8

Share		5(a)

Stock Appreciation Rights		7

Stock Options		6

Stock Unit		9

Subsidiary Corporation		6(e)

EX-10.20 50 a2155511zex-10_20.htm EXHIBIT 10.20

Exhibit 10.20

ALTRA HOLDINGS, INC

2004 EQUITY INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

THIS RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”) is made as of , by and between Altra Holdings, Inc., a Delaware corporation (the “Company”), and (the “Participant”). This Agreement is subject to all of the terms and conditions as set forth herein and in the Company’s 2004 Equity Incentive Plan (the “Plan”), which is incorporated herein by reference.

The parties agree as follows:

“Affiliate” means, with respect to a specified Person, any other Person, directly or indirectly, controlling, controlled by or under common control with such specified Person. For purposes of this definition, the term “control,” including the terms “controlling,” “controlled by” and “under common control,” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities or otherwise.

“Applicable Percentage” shall be the percentage equal to (i) the number of shares of the capital stock of the Company being Transferred by the Genstar Parties in the Drag-Along Sale (as defined in Section 7 hereof) divided by (ii) the aggregate number of shares of the capital stock of the Company then owned by the Genstar Parties.

“Board” means the board of directors of the Company.

“Cause” shall mean each of: (i) the Participant’s material breach of the terms of any agreement between the Participant and the Company; (ii) the Participant’s willful failure or refusal to perform any of its material duties to the Company; (iii) the Participant’s willful insubordination or disregard of the legal directives of the Board which are not inconsistent with the scope, ethics and nature of the Participant’s duties and responsibilities to the Company; (iv) the Participant’s engaging in misconduct which has a material adverse impact on the reputation, business, business relationships or financial condition of the Company; (v) the Participant’s commission of an act of fraud or embezzlement against the Company; or (vi) any conviction of, or plea of guilty or nolo contendere by, the Participant with respect to a felony (other than a traffic violation), a crime involving moral turpitude, fraud or misrepresentation; provided, however, that Cause shall not be deemed to exist under any of clauses (i), (ii) or (iii) above unless the Participant has been given reasonably detailed written notice of the grounds for such Cause and the Participant has not effected a cure within twenty (20) days of the date of receipt of such notice.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

“Fair Market Value” means an amount determined in good faith by the Board (without discount for lack of marketability or minority interest).

“Genstar Parties” means, collectively, Genstar Capital Partners III, L.P. and Stargen III, L.P.

“Permitted Transfer” means a Transfer by the Participant of Shares made (i) to the Company, (ii) by way of gratuitous donation to any trust exclusively for the benefit of the Participant’s spouse, direct descendants (including legally adopted children) or direct ascendants or (iii) by way of bequest or inheritance upon the death of the Participant to his or her executors, administrators, testamentary trustees, legatees or beneficiaries; provided that, in the event of any Transfer made pursuant to one of the exemptions provided by clauses (ii) or (iii) above, the transferee, assignee or donee shall have become a party to this Agreement in the capacity of Participant and such Participant shall have furnished the Company with an executed copy of this Agreement.

“Person” shall mean any individual, partnership, limited liability company, corporation, trust, joint venture, unincorporated organization, other legal entity, government or agency or political subdivision thereof.

“Public Offering” means the issuance and sale of shares of common stock of the Company to the public pursuant to a registration statement under the Securities Act which has been declared effective by the Securities and Exchange Commission (other than a registration statement on Form S-4, Form S-8 or any other similar form).

“Qualified Public Offering” means an underwritten Public Offering (which may be the initial Public Offering) resulting in gross proceeds to the Company of at least $50,000,000.

“Released Shares” means any of the Shares which, from time to time, have been released from the Forfeiture Restrictions set forth in Section 3 hereof.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Subsidiary” means any and all corporations, partnerships, limited liability companies and other entities with respect to which the Company directly or indirectly owns more than 50% of (i) the securities having the power to elect members of the board of directors or similar body governing the affairs of such entity or (ii) the equity interests of such entity.

“Transfer” means, with respect to any Shares, any direct or indirect, voluntary or involuntary, offer to sell, transfer, sale, assignment, pledge, hypothecation, short sales, loan, grant of an option to purchase or other disposition of any of the Shares, or the entering of any contract or agreement to do any of the foregoing.

“Unreleased Shares” means any of the Shares which, from time to time, have not yet been released from the Forfeiture Restrictions set forth in Section 3 hereof.

(a) Subject to the terms and conditions of this Agreement and the Plan, the Company hereby agrees to issue to the Participant shares of the Company’s common stock par value $0.001 (the “Shares”) for good and valuable consideration which the Company has determined to exceed the par value of the Company’s common stock.

(b) The issuance of the Shares under this Agreement shall occur at the principal office of the Company simultaneously with the execution of this Agreement by the Company and the Participant or on such other date as the Company and the Participant shall agree (the “Issuance Date”). Subject to the provisions of Section 4 below, on the Issuance Date, the Company will deliver to the Participant a certificate representing the Shares to be issued to the Participant (which shall be issued in the Participant’s name).

(a) Subject to the provisions of Section 3(b) and Section 8 below, if the Participant ceases to be an Employee, director or consultant of the Company and each Subsidiary for any or no reason, all of the Unreleased Shares shall thereupon be forfeited immediately and without any further action by the Company (the “Forfeiture Restriction”). Upon the occurrence of such a forfeiture, the Company shall become the legal and beneficial owner of the Shares being forfeited and all rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name the number of Shares being forfeited by the Participant.

(b) Provided that the Participant continues to be an employee, director or consultant of the Company or a Subsidiary on such date, the Shares shall be released from the Forfeiture Restriction as follows:

Release Date		Percentage of Shares Released From Forfeiture Restriction
First anniversary of Issuance Date		20%
Second anniversary of Issuance Date		40%
Third anniversary of Issuance Date		60%
Fourth anniversary of Issuance Date		80%
Fifth anniversary of Issuance Date		100%

(c) Notwithstanding anything to the contrary in this Agreement, no Unreleased Shares or any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Participant or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect.

(a) The Participant hereby authorizes and directs the secretary of the Company, or such other person designated by the Board, to transfer any Unreleased Shares which have been forfeited by the Participant to the Company.

(b) To insure the availability for delivery of the Participant’s Unreleased Shares in the event of forfeiture of such Shares by the Participant pursuant to Section 3, the Participant hereby appoints the secretary, or any other person designated by the Board as escrow agent, as its attorney-in-fact to assign and transfer unto the Company, any Unreleased Shares forfeited by the Participant pursuant to Section 3 and shall, upon execution of this Agreement, deliver and deposit with the secretary of the Company, or such other person designated by the Board, the share certificate or certificates representing the Unreleased Shares, together with the stock assignment duly endorsed in blank, attached hereto as Exhibit A. The Unreleased Shares and stock assignment shall be held by the secretary in escrow, pursuant to the Joint Escrow Instructions of the Company and the Participant attached as Exhibit B hereto, until (i) the Shares are forfeited by the Participant as provided in Section 3, (ii) such Unreleased Shares are released from the Forfeiture Restriction or (iii) until such time as this Agreement no longer is in effect. Upon release of the Unreleased Shares, the escrow agent shall deliver to the Participant the certificate or certificates representing such Shares in the escrow agent’s possession belonging to the Participant in accordance with the terms of the Joint Escrow Instructions and the escrow agent shall be discharged of all further obligations hereunder; provided, however, that the escrow agent shall nevertheless retain such certificate or certificates as escrow agent if so required pursuant to other restrictions imposed pursuant to this Agreement.

(c) The Company, or its designee, shall not be liable for any act it may do or omit to do with respect to holding the Shares in escrow and while acting in good faith.

(a) General Restriction. Without the prior written consent of the Company, which the Company may withhold in its sole discretion, the Participant hereby agrees not to Transfer any Shares, except for (i) Permitted Transfers made in compliance with this Agreement, (ii) Transfers pursuant to Sections 6, 7 or 8 of this Agreement and (iii) Transfers as part of a Public Offering and, after the Company’s initial Public Offering, in accordance with Rule 144 under the Securities Act. Any attempt by a Participant to Transfer any Shares other than in compliance with this Agreement shall be null and void and the Company shall not, and shall not permit, any transfer agent to give any effect in the Company’s stock records to such attempted Transfer.

(b) Market Standoff Agreement. The Participant hereby agrees in connection with an underwritten Public Offering, not to Transfer any Shares, including a sale pursuant to Rule 144 under the Securities Act (except as part of such underwritten Public Offering), during the seven day period prior to, and during the thirty (30) day period (or such longer period of up to 180 days as may be required by the Board or such underwriter) beginning on, the effective date of any registration statement with respect to such Public Offering (except as part of such registration) or the commencement of the public distribution of securities. In order to enforce the foregoing covenants, the Company may impose stop-transfer instructions with respect to the securities of the Participant. The Participant hereby agrees to enter into a separate agreement providing for the foregoing, as may be requested by the managing underwriter(s) of any such Public Offering.

(c) Securities Laws Compliance. The Participant hereby agrees and acknowledges that to the extent the Participant is permitted pursuant to this Agreement to Transfer Shares, the Participant will not Transfer any Shares unless (i) the Transfer is pursuant to an effective registration statement under the Securities Act, or the rules and regulations in effect thereunder, or pursuant to Rule 144 under the Securities Act or (ii) counsel for the Participant (which counsel shall be reasonably acceptable to the Company) shall have furnished the Company with an opinion (reasonably satisfactory in form and substance to the Company) that no such registration is required because of the availability of an exemption from registration under the Securities Act; provided, however, that the Company may waive the requirement of such opinion in its sole discretion. Notwithstanding the foregoing, the Company acknowledges and agrees that a Permitted Transfer shall be deemed to be in compliance with this Section 5(c) and that no opinion of counsel is required in connection therewith.

(a) The Participant is holding the Shares for his or her own account, and not for the account of any other person. The Participant is holding the Shares for investment and not with a view to distribution or resale thereof except in compliance with applicable laws regulating securities.

(b) The Participant is presently an employee of, or consultant to, the Company and/or a Subsidiary and in such capacity has become personally familiar with the business of the Company and its Subsidiaries.

(c) The Participant has had the opportunity to ask questions of, and to receive answers from, the Company with respect to the terms and conditions of the transactions contemplated hereby and with respect to the business, affairs, financial conditions, and results of operations of the Company and its Subsidiaries.

(d) The Participant understands that the Shares have not been registered under the Securities Act and the Shares cannot be transferred by the Participant unless such transfer is registered under the Securities Act or an exemption from such registration is available. The Company has made no agreements, covenants or undertakings whatsoever to register the transfer of the Shares under the Securities Act. The Company has made no representations, warranties, or covenants whatsoever as to whether any exemption from the Securities Act, including, without limitation, any exemption for limited sales in routine brokers’ transactions pursuant to Rule 144 of the Securities Act, will be available.

(e) None of the Company’s securities is presently publicly traded, and the Company has made no representations, covenants or agreements as to whether there will be a public market for any of its securities.

(f) The Company has made no warranties or representations to the Participant with respect to the income tax consequences of the transactions contemplated by this Agreement, and the Participant is in no manner relying on the Company or its representatives for an assessment of such tax consequences.

(g) The representations, warranties and covenants contained in this Section 9 shall survive the later of the date of execution and delivery of this Agreement or the issuance of the Shares.

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). EXCEPT AS OTHERWISE PROVIDED IN THE ACT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, OPTION, LOAN OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR (B) IF THE COMPANY HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL TO THE HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT OR THE RULES AND REGULATIONS IN EFFECT THEREUNDER, AND IN COMPLIANCE WITH APPLICABLE PROVISIONS OF STATE SECURITIES LAWS.”

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO FORFEITURE IN FAVOR OF THE COMPANY AND MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A RESTRICTED STOCK AWARD AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.”

(a) This Agreement shall be governed by the laws of the State of New York. This Agreement represents the entire agreement between the parties with respect to the issuance of the Shares to the Participant and may only be modified or amended in a writing signed by Participant and the Company.

(b) This Agreement and the Plan constitute the entire agreement between the Company and the Participant concerning the subject matter hereof. Any previous agreement

between the Company and the Participant concerning the subject matter hereof is hereby terminated and superseded by this Agreement. This Agreement may not be assigned by the Participant except as required in connection with a permitted transfer thereunder. Subject to the foregoing, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, permitted assigns, heirs, executors and administrators of the parties hereto. Any attempted transfer of this Agreement not in compliance with the terms hereof shall be null and void.

(c) Either party’s failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions, nor prevent that party thereafter from enforcing each and every other provision of this Agreement. The rights granted both parties herein are cumulative and shall not constitute a waiver of either party’s right to assert all other legal remedies available to it under the circumstances.

(d) THE PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE LAPSING OF THE FORFEITURE RESTRICTION PURSUANT TO SECTION 3 HEREOF IS EARNED ONLY BY CONTINUING SERVICE TO THE COMPANY (OR A SUBSIDIARY) AS AN “AT WILL” EMPLOYEE, CONSULTANT OR DIRECTOR OF THE COMPANY (OR A SUBSIDIARY) AND NOT THROUGH THE ACT OF BEING HIRED OR ACQUIRING SHARES HEREUNDER. THE PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE FORFEITURE RESTRICTION SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE OR CONSULTANT FOR SUCH PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH THE COMPANY’S RIGHT TO TERMINATE THE PARTICIPANT’S EMPLOYMENT OR SERVICE TO THE COMPANY AT ANY TIME, WITH OR WITHOUT CAUSE.

(e) Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally or sent by facsimile transmission, overnight air courier, or first class certified or registered mail, postage prepaid, and addressed to the parties at the addresses of the parties set forth at the end of this Agreement or such other address as a party may designate by five (5) days’ advance written notice to the other parties hereto. All notices and communications shall be deemed to have been received unless otherwise set forth herein: (i) in the case of personal delivery, on the date of such delivery; (ii) in the case of facsimile transmission, on the date on which the sender receives electronic confirmation that such notice was received by the addressee; (iii) in the case of overnight air courier, on the second business day following the day sent, with receipt confirmed by the courier; and (iv) in the case of mailing by first class certified or registered mail, postage prepaid, return receipt requested, on the fifth business day following such mailing.

(f) If any term or provision of this Agreement or the application thereof to any person, property or circumstance shall to any extent be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons, property or circumstances other than those as to which it is invalid or unenforceable, shall not be affected

thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

(g) The provisions of this Agreement shall apply, to the full extent set forth herein with respect to the Shares, to any and all shares of capital stock or other securities of the Company or a subsidiary which may be issued in respect of, in exchange for, in substitution of the Shares, and shall be appropriately adjusted for any stock dividends, splits, reverse splits, combinations, recapitalizations and the like occurring after the date hereof.

(h) This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(i) The headings of the sections of this Agreement are for convenience and shall not by themselves determine the interpretation of this Agreement. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rule of strict construction will be applied against any party.

(j) This Agreement will not confer any rights or remedies upon any person other than the parties hereto and their respective successors and permitted assigns; provided, however, that each of the Genstar Parties are third party beneficiaries of Sections 6, 7, and 8 hereof.

(k) By his or her signature below, the Participant agrees to be bound by the terms and conditions of the Plan. The Participant has reviewed the Plan in its entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of the this Agreement and the Plan. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the administrator of the Plan upon any questions arising under the Plan or this Agreement.

(Signature Page Follows)

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first set forth above.

ALTRA HOLDINGS, INC.:		PARTICIPANT:


By:
	Name:	[Name]
	Title:


Address:		Address:

Altra Holdings, Inc. 14 Hayward Street Quincy, MA 02171 Attention: Michael L. Hurt Telecopy No.: (617) 689-6202

CONSENT OF SPOUSE

I, , spouse of , have read and approve the foregoing Agreement. In consideration of issuing to my spouse to shares of the common stock of Altra Holdings, Inc. set forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares issued pursuant thereto under the community property laws or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement.

Dated: , 2005
	Signature of Spouse

EXHIBIT A

STOCK ASSIGNMENT

FOR VALUE RECEIVED, hereby sells, assigns and transfers unto ALTRA HOLDINGS, INC., a Delaware corporation, shares of the Common Stock of ALTRA HOLDINGS, INC., a Delaware corporation, standing in its name of the books of said corporation represented by Certificate No. herewith and do hereby irrevocably constitute and appoint to transfer the said stock on the books of the within named corporation with full power of substitution in the premises.

This Stock Assignment may be used only in accordance with the Restricted Stock Award Agreement between ALTRA HOLDINGS, INC. and dated , 2005.

Dated: , 2005



	[Name]

INSTRUCTIONS: Please do not fill in the blanks other than the signature line. The purpose of this assignment is to enable the Company to enforce the Forfeiture Restriction as set forth in the Agreement, without requiring additional signatures on the part of the Participant.

EXHIBIT B

JOINT ESCROW INSTRUCTIONS

January 6, 2005

Secretary

Altra Holdings, Inc.
c/o Genstar Capital Partners III, L.P.
Four Embarcadero Center
Suite 1900
San Francisco, CA 94111-4191
Attention: Jean-Pierre L. Conte
Telecopy No.: (415) 834-2383

Ladies and Gentlemen:

As escrow agent (the “Escrow Agent”) for both Altra Holdings, Inc., a Delaware corporation (the “Company”), and the undersigned recipient of stock of the Company (the “Participant”), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Restricted Stock Award Agreement (“Agreement”) between the Company and the undersigned (the “Escrow”), in accordance with the following instructions:

1. In the event of forfeiture by the Participant of any of the shares owned by the Participant pursuant to the Forfeiture Restriction set forth in the Agreement, the Company and/or any assignee of the Company (referred to collectively for convenience herein as the “Company”) shall give to the Participant and you a written notice specifying the number of shares of stock forfeited and the date of forfeiture. The Participant and the Company hereby irrevocably authorize and direct you to effect the forfeiture contemplated by such notice in accordance with the terms of said notice.

2. As of the date of forfeiture indicated in such notice, you are directed (a) to date the stock assignments necessary for the forfeiture and transfer in question, (b) to fill in the number of shares being forfeited and transferred, and (c) to deliver the same, together with the certificate evidencing the shares of stock to be forfeited and transferred, to the Company or its assignee.

3. The Participant irrevocably authorizes the Company to deposit with you any certificates evidencing shares of stock to be held by you hereunder and any additions and substitutions to said shares as defined in the Agreement. The Participant does hereby irrevocably constitute and appoint you as the Participant’s attorney-in-fact and agent for the term of this escrow to execute with respect to such securities all documents necessary or appropriate to make such securities negotiable and to complete any transaction herein contemplated, including but not limited to the filing with any applicable state blue sky authority of any required applications for consent to, or notice of transfer of, the securities. Subject to the provisions of this paragraph 3, the Participant shall exercise all rights and privileges of a stockholder of the Company while the stock is held by you.

4. Upon written request of the Participant, but no more than once per calendar year, unless the Forfeiture Restriction has been enforced, you will deliver to the Participant a certificate or certificates representing so many shares of stock as are not then subject to the Forfeiture Restriction. Within one hundred twenty (120) days after any voluntary or involuntary termination of the Participant’s services to the Company for any or no reason, you will deliver to the Participant a certificate or certificates representing the aggregate number of shares held or issued pursuant to the Agreement and not forfeited pursuant to the Forfeiture Restriction set forth in Section 3 of the Agreement.

5. If at the time of termination of this escrow you should have in your possession any documents, securities, or other property belonging to the Participant, you shall deliver all of the same to the Participant and shall be discharged of all further obligations hereunder.

6. Your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto.

7. You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties. You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for the Participant while acting in good faith, and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith.

8. You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. In case you obey or comply with any such order, judgment or decree, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

9. You shall not be liable in any respect on account of the identity, authorities or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder.

10. You shall not be liable for the expiration of any rights under any applicable state, federal or local statute of limitations or similar statute or regulation with respect to these Joint Escrow Instructions or any documents deposited with you.

11. You shall be entitled to employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor.

12. Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be an officer or agent of the Company or if you shall resign by written notice to each party. In the event of any such termination, the Company shall appoint a successor Escrow Agent.

13. If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments.

14. It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities held by you hereunder, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings.

15. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally or sent by facsimile transmission, overnight air courier, or first class certified or registered mail, postage prepaid, and addressed to the parties at the addresses of the parties set forth at the end of these Joint Escrow Instructions or such other address as a party may designate by five (5) days’ advance written notice to the other parties hereto. All notices and communications shall be deemed to have been received unless otherwise set forth herein: (i) in the case of personal delivery, on the date of such delivery; (ii) in the case of facsimile transmission, on the date on which the sender receives electronic confirmation that such notice was received by the addressee; (iii) in the case of overnight air courier, on the second business day following the day sent, with receipt confirmed by the courier; and (iv) in the case of mailing by first class certified or registered mail, postage prepaid, return receipt requested, on the fifth business day following such mailing.

16. By signing these Joint Escrow Instructions, you become a party hereto only for the purpose of said Joint Escrow Instructions; you do not become a party to the Agreement.

17. This instrument shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns.

18. These Joint Escrow Instructions shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, excluding that body of law pertaining to conflicts of law.

(Signature Page Follows)

IN WITNESS WHEREOF, the parties have executed these Joint Escrow Instructions as of the date first written above.

		Very truly yours,

		ALTRA HOLDINGS, INC.


		By:
		Name:
		Title:

		Address:	Altra Holdings, Inc.
			14 Hayward Street
			Quincy, MA 02171
			Attention: Michael L. Hurt
			Telecopy No.: (617) 689-6202

		PARTICIPANT:



		[Name]


		Address:



ESCROW AGENT:


By:
Name:
Title: Secretary, Altra Holdings, Inc.




Address:	Altra Holdings, Inc.
	14 Hayward Street
	Quincy, MA 02171
	Attention: Michael L. Hurt
	Telecopy No.: (617) 689-6202

ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to the above-referenced Federal Tax Code, to include in taxpayer’s gross income for the current taxable year, the amount of any compensation taxable to taxpayer in connection with his receipt of the property described below

1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

NAME: TAXPAYER: [Name]	SPOUSE:

ADDRESS:



IDENTIFICATION NO.:		SPOUSE:

TAXABLE YEAR: 2005

2. The property with respect to which the election is made is described as follows: (the “Shares”) of the Common Stock of Altra Holdings, Inc. (the “Company”).

3. The date on which the property was transferred is: .

4. The property is subject to the following restrictions:

The Shares may be repurchased by the Company, or its assignee, on certain events. This right lapses with regard to a portion of the Shares over time.

5. The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is approximately: .

6. The amount (if any) paid for such property is: $ per share.

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

Dated:
			Taxpayer

EX-10.21 51 a2155511zex-10_21.htm EXHIBIT 10.21

Exhibit 10.21

COMMON STOCK PURCHASE AGREEMENT

THIS AGREEMENT is made this 30th day of November, 2004, by and between Altra Industrial Motion, Inc., a Delaware corporation (the “Company”), and Altra Holdings, Inc., a Delaware corporation (the “Purchaser”).

WHEREAS, Purchaser is purchasing shares of common stock of the Company prior to the issuance of any other shares of common stock of the Company;

NOW THEREFORE, IT IS HEREBY AGREED:

Purchaser understands that if the Company does not register the Stock with the Securities and Exchange Commission pursuant to Sections 12 or 15 of the Securities Exchange Act of 1934 or if a registration statement covering the Stock (or a filing pursuant to the exemption from registration under Regulation A of the Act) under the Act is not in effect when Purchaser desires to sell the Stock, Purchaser may be required to hold the Stock for an indeterminate period. The Purchaser also acknowledges that Purchaser understands that any sale

of the Securities that might be made by it in reliance upon Rule 144 under the Act may be made only in limited amounts in accordance with the terms and conditions of that rule and that Purchaser may not be able to sell the Stock at the time or in the amount Purchaser so desires. Purchaser is familiar with Rule 144 and understands that the Stock constitutes “restricted securities” within the meaning of that Rule.

The signature on this assignment must
correspond with the name as it appears
upon the face of the within Note in every
particular without alteration or
enlargement or any change whatsoever
and be guaranteed by the endorser’s
bank or broker.

Signature Guarantee:

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.

	THE COMPANY:

	ALTRA INDUSTRIAL MOTION, INC.

	By:
	Name: Charles W. Nims
	Title: President


	PURCHASER:


	ALTRA HOLDINGS, INC.

	By:
	Name: Michael L. Hurt
	Title: Chief Executive Officer

[Common Stock Purchase Agreement]

Exhibit A

Purchase Price

Contributed Capital Stock of The Kilian Company

Class of Stock	Number of Shares	FMV
Series A Preferred Stock	87,656	$	8,765,600.00
Common Stock	8,767	$	54,443.07

Contributed Total Cash: $39,994,400.00

EX-10.22 52 a2155511zex-10_22.htm EXHIBIT 10.22

Exhibit 10.22

EXECUTION COPY

CREDIT AGREEMENT

by and among

ALTRA INDUSTRIAL MOTION, INC.

as Parent,

and

EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO

as Borrowers,

THE LENDERS THAT ARE SIGNATORIES HERETO

as the Lenders,

and

WELLS FARGO FOOTHILL, INC.

as the Arranger and Administrative Agent

Dated as of November 30, 2004

TABLE OF CONTENTS

1.	DEFINITIONS AND CONSTRUCTION

	1.1	Definitions

	1.2	Accounting Terms

	1.3	Code

	1.4	Construction

	1.5	Schedules and Exhibits

2.	LOAN AND TERMS OF PAYMENT

	2.1	Revolver Advances

	2.2	Intentionally Omitted

	2.3	Borrowing Procedures and Settlements

	2.4	Payments

	2.5	Overadvances

	2.6	Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations

	2.7	Cash Management

	2.8	Crediting Payments

	2.9	Designated Account

	2.10	Maintenance of Loan Account; Statements of Obligations

	2.11	Fees

	2.12	Letters of Credit

	2.13	LIBOR Option

	2.14	Capital Requirements

	2.15	Joint and Several Liability of Borrowers

3.	CONDITIONS; TERM OF AGREEMENT

	3.1	Conditions Precedent to the Initial Extension of Credit

	3.2	Conditions Precedent to all Extensions of Credit

	3.3	Term

	3.4	Effect of Termination

	3.5	Early Termination by Borrowers

	3.6	Conditions Subsequent to the Initial Extension of Credit

4.	REPRESENTATIONS AND WARRANTIES

	4.1	No Encumbrances

	4.2	Eligible Accounts

	4.3	Eligible Inventory

	4.4	Equipment

	4.5	Location of Inventory and Equipment

	4.6	Inventory Records

	4.7	State of Incorporation; Location of Chief Executive Office; Organizational Identification Number; Commercial Tort Claims

	4.8	Due Organization and Qualification; Restricted Subsidiaries

	4.9	Due Authorization; No Conflict

	4.10	Litigation

	4.11	No Material Adverse Change

	4.12	Fraudulent Transfer

	4.13	Employee Compliance

	4.14	Environmental Condition

	4.15	Intellectual Property

	4.16	Leases

	4.17	Deposit Accounts and Securities Accounts

	4.18	Complete Disclosure

	4.19	Indebtedness

	4.20	Material Contracts

5.	AFFIRMATIVE COVENANTS

	5.1	Accounting System

	5.2	Collateral Reporting

	5.3	Financial Statements, Reports, Certificates

	5.4	Intentionally Omitted

	5.5	Inspection

	5.6	Maintenance of Properties

	5.7	Taxes

	5.8	Insurance

	5.9	Location of Inventory and Equipment

	5.10	Compliance with Laws

	5.11	Leases

	5.12	Existence

	5.13	Environmental

	5.14	Intentionally Omitted

	5.15	Control Agreements

	5.16	Formation of Subsidiaries

	5.17	Real Property

	5.18	ERISA Compliance

6.	NEGATIVE COVENANTS

	6.1	Indebtedness

	6.2	Liens

	6.3	Restrictions on Fundamental Changes

	6.4	Disposal of Assets

	6.5	Change Name

	6.6	Nature of Business

	6.7	Prepayments and Amendments

	6.8	Intentionally Omitted

	6.9	Intentionally Omitted

	6.10	Distributions

	6.11	Fiscal Year

	6.12	Investments

	6.13	Transactions with Affiliates

	6.14	Use of Proceeds

	6.15	Intentionally Omitted

iii

	6.16	Financial Covenants

	6.17	Acquisition Documents

	6.18	Indenture Documents

	6.19	Governing Documents

	6.20	Real Property Collateral

7.	EVENTS OF DEFAULT

8.	THE LENDER GROUP’S RIGHTS AND REMEDIES

	8.1	Rights and Remedies

	8.2	Remedies Cumulative

9.	TAXES AND EXPENSES

10.	WAIVERS; INDEMNIFICATION

	10.1	Demand; Protest; etc

	10.2	The Lender Group’s Liability for Collateral

	10.3	Indemnification

11.	NOTICES

12.	CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER

13.	ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS

	13.1	Assignments and Participations

	13.2	Successors

14.	AMENDMENTS; WAIVERS

	14.1	Amendments and Waivers

	14.2	Replacement of Holdout Lender

	14.3	No Waivers; Cumulative Remedies

15.	AGENT; THE LENDER GROUP

	15.1	Appointment and Authorization of Agent

	15.2	Delegation of Duties

	15.3	Liability of Agent

	15.4	Reliance by Agent

	15.5	Notice of Default or Event of Default

	15.6	Credit Decision

	15.7	Costs and Expenses; Indemnification

	15.8	Agent in Individual Capacity

	15.9	Successor Agent

	15.10	Lender in Individual Capacity

	15.11	Withholding Taxes

	15.12	Collateral Matters

	15.13	Restrictions on Actions by Lenders; Sharing of Payments

	15.14	Agency for Perfection

	15.15	Payments by Agent to the Lenders

	15.16	Concerning the Collateral and Related Loan Documents

	15.17	Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information

	15.18	Several Obligations; No Liability

	15.19	Bank Product Providers

16.	GENERAL PROVISIONS

	16.1	Effectiveness

	16.2	Section Headings

	16.3	Interpretation

	16.4	Severability of Provisions

	16.5	Counterparts; Electronic Execution

	16.6	Revival and Reinstatement of Obligations

	16.7	Confidentiality

	16.8	Integration

	16.9	Altra Industrial Motion, Inc. as Agent for Borrowers

EXHIBITS AND SCHEDULES

Exhibit A-1		Form of Assignment and Acceptance
Exhibit B-1		Form of Borrowing Base Certificate
Exhibit C-1		Form of Compliance Certificate
Exhibit L-1		Form of LIBOR Notice

Schedule A-1		Agent’s Account
Schedule C-1		Commitments
Schedule D-1		Designated Account
Schedule P-1		Permitted Holders
Schedule P-2		Permitted Liens
Schedule P-3		Permitted Investments
Schedule R-1		Real Property Collateral
Schedule 1.1		Definitions
Schedule 2.7(a)		Cash Management Banks
Schedule 3.1		Conditions Precedent
Schedule 4.5(a)		Inventory and Equipment Stored with Bailees or Warehousemen
Schedule 4.5(b)		Locations of Inventory and Equipment
Schedule 4.7(a)		States of Organization
Schedule 4.7(b)		Chief Executive Offices
Schedule 4.7(c)		Organizational Identification Numbers
Schedule 4.7(d)		Commercial Tort Claims
Schedule 4.8(b)		Capitalization of Borrowers
Schedule 4.8(c)		Capitalization of Borrowers’ Restricted Subsidiaries
Schedule 4.10		Litigation
Schedule 4.13(a)		ERISA Plans
Schedule 4.14		Environmental Matters
Schedule 4.17		Deposit Accounts and Securities Accounts
Schedule 4.19		Permitted Indebtedness
Schedule 5.2		Collateral Reporting
Schedule 5.3		Financial Statements, Reports, Certificates

CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this “Agreement”), is entered into as of November 30, 2004, by and among the lenders identified on the signature pages hereof (such lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “Lender” and collectively as the “Lenders”), and WELLS FARGO FOOTHILL, INC., a California corporation, as the arranger and administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, “Agent”), and ALTRA INDUSTRIAL MOTION, INC., a Delaware corporation (“Parent”), and each of Parent’s Subsidiaries identified on the signature pages hereof (Parent and such Subsidiaries are referred to hereinafter each individually as a “Borrower”, and individually and collectively, jointly and severally, as the “Borrowers”).

The parties agree as follows:

1. DEFINITIONS AND CONSTRUCTION.

1.1 Definitions. Capitalized terms used in this Agreement shall have the meanings specified therefor on Schedule 1.1.

1.2 Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. In the event of any change in GAAP that occurs after the date of this Agreement that would affect the calculation or application of the financial or other covenants contained herein, Agent and Borrowers agree to negotiate to amend such financial or other covenants (or the definitions used therein) to eliminate the effect of such change and no Event of Default shall be deemed to exist solely as a result of such change in GAAP during the period prior to the effectiveness of such amendment; provided. that such financial or other covenants shall continue to be calculated in the manner provided immediately prior to such change until such amendment has been executed by Borrowers and the Required Lenders. When used herein, the term “financial statements” shall include the notes and schedules thereto, if any. Whenever the term “Borrowers” or the term “Parent” is used in respect of a financial covenant or a related definition, it shall be understood to mean Borrowers and their Subsidiaries or Parent and its Subsidiaries, as applicable, on a consolidated basis unless the context clearly requires otherwise.

1.3 Code. Any terms used in this Agreement that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein, provided, however, that to the extent that the Code is used to define any term herein and such term is defined differently in different Articles of the Code, the definition of such term contained in Article 9 shall govern.

1.4 Construction. Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, and the terms “includes” and “including” are not limiting. The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement or in the other Loan Documents to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Any reference herein to the satisfaction, payment or repayment in full of the Obligations or the Bank Product Obligations, as the case may be, shall mean the repayment in full in cash (or cash collateralization or the provision of other security in accordance with the terms hereof) of all Obligations other than contingent indemnification Obligations and other than any Bank Product Obligations that, at such time, are allowed by the applicable Bank Product Provider to remain outstanding and are not required to be repaid or cash collateralized

pursuant to the provisions of this Agreement. Any reference herein to any Person shall be construed to include such Person’s successors and assigns. Any requirement of a writing contained herein or in the other Loan Documents shall be satisfied by the transmission of a Record.

1.5 Schedules and Exhibits. All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference.

2. LOAN AND TERMS OF PAYMENT.

2.1 Revolver Advances.

(a) Subject to the terms and conditions of this Agreement, and during the term of this Agreement, each Lender agrees (severally, not jointly or jointly and severally) to make advances (“Advances”) to Borrowers in an amount at any one time outstanding not to exceed such Lender’s Pro Rata Share of an amount equal to the lesser of (i) the Maximum Revolver Amount less the Letter of Credit Usage, or (ii) the Borrowing Base less the Letter of Credit Usage.

(b) Anything to the contrary in this Section 2.1 notwithstanding, Agent shall have the right to establish reserves in such amounts, and with respect to such matters, as Agent in its Permitted Discretion shall deem necessary, against the Borrowing Base, including reserves (i) with respect to (A) sums that Borrowers are required to pay by any Section of this Agreement or any other Loan Document (such as taxes, assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable under such leases) and have failed to pay, and (B) amounts owing by Borrowers or their Restricted Subsidiaries to any Person to the extent secured by a Lien on, or trust over, any of the Collateral (other than a Permitted Lien), which Lien or trust, in the Permitted Discretion of Agent likely would have a priority superior to the Agent’s Liens (such as Liens or trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes where given priority under applicable law) in and to such item of the Collateral, and (ii) after the occurrence and during the continuance of an Event of Default, with respect to such other matters as Agent in its Permitted Discretion shall deem necessary or appropriate. In addition to the foregoing and subject to any specific limitations set forth in any other Loan Document, Agent shall have the right to have the Inventory reappraised by a qualified appraisal company selected by Agent from time to time after the Closing Date for the purpose of redetermining the Eligible Inventory portion of the Collateral and, as a result, redetermining the Borrowing Base.

(c) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the terms and conditions of this Agreement, reborrowed at any time during the term of this Agreement.

(d) Notwithstanding anything to the contrary contained herein, Lenders shall not be obligated to make any Advances against any Inventory or Equipment located at any of the locations set forth on Schedule 4.5(a) unless and until Agent shall have received reasonably satisfactory information as to the value of the Inventory and/or Equipment stored at such locations and as to the monthly rent payable in respect of such locations.

2.2 Intentionally Omitted

2.3 Borrowing Procedures and Settlements.

(a) Procedure for Borrowing. Each Borrowing shall be made by an irrevocable written request by an Authorized Person delivered to Agent. If Swing Lender is obligated to make a Swing Loan pursuant to Section 2.3(b) below, such notice must be received by Agent no later than 10:00 a.m. (California time) on the Business Day that is the requested Funding Date specifying (i) the amount of such Borrowing, and (ii) the requested Funding Date, which shall be a Business Day; provided, however, that if Swing Lender is not obligated to make a Swing Loan as to a requested Borrowing, such notice must be received by Agent no later

than 10:00 a.m. (California time) on the Business Day prior to the date that is the requested Funding Date. At Agent’s election, in lieu of delivering the above-described written request, any Authorized Person may give Agent telephonic notice of such request by the required time. In such circumstances, Borrowers agree that any such telephonic notice will be confirmed in writing within 24 hours of the giving of such telephonic notice, but the failure to provide such written confirmation shall not affect the validity of the request.

(b) Making of Swing Loans. In the case of a request for an Advance and so long as either (i) the aggregate amount of Swing Loans made since the last Settlement Date plus the amount of the requested Advance does not exceed $10,000,000, or (ii) Swing Lender, in its sole discretion, shall agree to make a Swing Loan notwithstanding the foregoing limitation, Swing Lender, as a Lender, shall make an Advance in the amount of such Borrowing (any such Advance made solely by Swing Lender as a Lender pursuant to this Section 2.3(b) being referred to as a “Swing Loan” and such Advances being referred to collectively as “Swing Loans”) available to Borrowers on the Funding Date applicable thereto by transferring immediately available funds to Borrowers’ Designated Account. Each Swing Loan shall be deemed to be an Advance hereunder and shall be subject to all the terms and conditions applicable to other Advances, except that all payments on any Swing Loan shall be payable to Swing Lender as a Lender solely for its own account. Subject to the provisions of Section 2.3(d)(ii), Swing Lender as a Lender shall not make and shall not be obligated to make any Swing Loan if Swing Lender has actual knowledge that (i) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing, or (ii) the requested Borrowing would exceed the Availability on such Funding Date. Swing Lender as a Lender shall not otherwise be required to determine whether the applicable conditions precedent set forth in Section 3 have been satisfied on the Funding Date applicable thereto prior to making any Swing Loan. The Swing Loans shall be secured by the Agent’s Liens, constitute Obligations hereunder, and bear interest at the rate applicable from time to time to Advances that are Base Rate Loans. Notwithstanding the foregoing, after a Swing Loan is made and after settlement of such Swing Loan is effected in accordance with Section 2.3(e), Administrative Borrower shall have the right to request that such Swing Loan be eligible to be a LIBOR Rate Loan by exercising the LIBOR Option in accordance with Section 2.13.

(i) In the event that Swing Lender is not obligated to make a Swing Loan, then promptly after receipt of a request for a Borrowing pursuant to Section 2.3(a), Agent shall notify the Lenders, not later than 1:00 p.m. (California time) on the Business Day immediately preceding the Funding Date applicable thereto, by telecopy, telephone, or other similar form of transmission, of the requested Borrowing. Each Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to Agent in immediately available funds, to Agent’s Account, not later than 10:00 a.m. (California time) on the Funding Date applicable thereto. After Agent’s receipt of the proceeds of such Advances, Agent shall make the proceeds thereof available to Administrative Borrower on the applicable Funding Date by transferring immediately available funds equal to such proceeds received by Agent to Administrative Borrower’s Designated Account; provided, however, that, subject to the provisions of Section 2.3(d)(ii), Agent shall not request any Lender to make, and no Lender shall have the obligation to make, any Advance if Agent shall have actual knowledge that (1) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has been waived, or (2) the requested Borrowing would exceed the Availability on such Funding Date.

(ii) Unless Agent receives notice from a Lender prior to 9:00 a.m. (California time) on the date of a Borrowing, that such Lender will not make available as and when required hereunder to Agent for the account of Borrowers the amount of that Lender’s Pro Rata Share of the Borrowing, Agent may assume that each Lender has made or will make such amount available to Agent in immediately available funds on the Funding Date and Agent may (but shall not be so required), in reliance upon such assumption, make available to Borrowers on such date a corresponding amount. If and to the extent any Lender shall not have made its full amount available to Agent in immediately available funds and Agent in such circumstances has made available to Borrowers such amount, that Lender shall on the Business Day following such Funding

Date make such amount available to Agent, together with interest at the Defaulting Lender Rate for each day during such period. A notice submitted by Agent to any Lender with respect to amounts owing under this subsection shall be conclusive, absent manifest error. If such amount is so made available, such payment to Agent shall constitute such Lender’s Advance on the date of Borrowing for all purposes of this Agreement. If such amount is not made available to Agent on the Business Day following the Funding Date, Agent will notify Administrative Borrower of such failure to fund and, upon demand by Agent, Borrowers shall pay such amount to Agent for Agent’s account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Advances composing such Borrowing. The failure of any Lender to make any Advance on any Funding Date shall not relieve any other Lender of any obligation hereunder to make an Advance on such Funding Date, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on any Funding Date.

(iii) Agent shall not be obligated to transfer to a Defaulting Lender any payments made by Borrowers to Agent for the Defaulting Lender’s benefit, and, in the absence of such transfer to the Defaulting Lender, Agent shall transfer any such payments to each other non-Defaulting Lender member of the Lender Group ratably in accordance with their Commitments (but only to the extent that such Defaulting Lender’s Advance was funded by the other members of the Lender Group) or, if so directed by Administrative Borrower and if no Default or Event of Default had occurred and is continuing (and to the extent such Defaulting Lender’s Advance was not funded by the Lender Group), retain same to be re-advanced to Borrowers as if such Defaulting Lender had made Advances to Borrowers. Subject to the foregoing, Agent may hold and, in its Permitted Discretion, re-lend to Borrowers for the account of such Defaulting Lender the amount of all such payments received and retained by Agent for the account of such Defaulting Lender. Solely for the purposes of voting or consenting to matters with respect to the Loan Documents, such Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be zero. This Section shall remain effective with respect to such Lender until (x) the Obligations under this Agreement shall have been declared or shall have become immediately due and payable, (y) the non-Defaulting Lenders, Agent, and Administrative Borrower shall have waived such Defaulting Lender’s default in writing, or (z) the Defaulting Lender makes its Pro Rata Share of the applicable Advance and pays to Agent all amounts owing by Defaulting Lender in respect thereof. The operation of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by Borrowers of their duties and obligations hereunder to Agent or to the Lenders other than such Defaulting Lender. Any such failure to fund by any Defaulting Lender shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle Administrative Borrower at its option, upon written notice to Agent, to arrange for a substitute Lender to assume the Commitment of such Defaulting Lender, such substitute Lender to be reasonably acceptable to Agent. In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance in favor of the substitute Lender (and agrees that it shall be deemed to have executed and delivered such document if it fails to do so) subject only to being repaid its share of the outstanding Obligations (including an assumption of its Pro Rata Share of the Risk Participation Liability) without any premium or penalty of any kind whatsoever; provided however, that any such assumption of the Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lender Groups’ or Borrowers’ rights or remedies against any such Defaulting Lender arising out of or in relation to such failure to fund.

(d) Protective Advances and Optional Overadvances.

(i) Agent hereby is authorized by Borrowers and the Lenders, from time to time in Agent’s sole discretion, (A) after the occurrence and during the continuance of a Default or an Event of Default, or (B) at any time that any of the other applicable conditions precedent set forth in Section 3 are not satisfied, to make Advances to Borrowers on behalf of the Lenders that Agent, in its Permitted Discretion deems necessary or desirable (1) to preserve or protect the Collateral, or any portion thereof, (2) to enhance the

likelihood of repayment of the Obligations, or (3) to pay any other amount chargeable to Borrowers pursuant to the terms of this Agreement, including Lender Group Expenses and the costs, fees, and expenses described in Section 9 (any of the Advances described in this Section 2.3(d)(i) shall be referred to as “Protective Advances”).

(ii) Any contrary provision of this Agreement notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as applicable, and either Agent or Swing Lender, as applicable, may, but is not obligated to, knowingly and intentionally, continue to make Advances (including Swing Loans) to Borrowers notwithstanding that an Overadvance exists or thereby would be created, so long as (A) after giving effect to such Advances, the outstanding Revolver Usage does not exceed the Borrowing Base by more than $6,000,000, and (B) after giving effect to such Advances, the outstanding Revolver Usage (except for and excluding amounts charged to the Loan Account for interest, fees, or Lender Group Expenses) does not exceed the Maximum Revolver Amount. In the event Agent obtains actual knowledge that the Revolver Usage exceeds the amounts permitted by the immediately foregoing provisions, regardless of the amount of, or reason for, such excess, Agent shall notify the Lenders as soon as practicable (and prior to making any (or any additional) intentional Overadvances (except for and excluding amounts charged to the Loan Account for interest, fees, or Lender Group Expenses) unless Agent determines that prior notice would result in imminent harm to the Collateral or its value), and the Lenders thereupon shall, together with Agent, jointly determine the terms of arrangements that shall be implemented with Borrowers intended to reduce, within a reasonable time, the outstanding principal amount of the Advances to Borrowers to an amount permitted by the foregoing provisions. In such circumstances, if any Lender disagrees over the proposed terms of reduction or repayment of any Overadvance, the terms of reduction or repayment thereof shall be implemented according to the determination of the Required Lenders. Each Lender shall be obligated to settle with Agent as provided in Section 2.3(e) for the amount of such Lender’s Pro Rata Share of any unintentional Overadvances by Agent reported to such Lender, any intentional Overadvances made as permitted under this Section 2.3(d)(ii), and any Overadvances resulting from the charging to the Loan Account of interest, fees, or Lender Group Expenses.

(iii) Each Protective Advance and each Overadvance shall be deemed to be an Advance hereunder, except that no Protective Advance or Overadvance shall be eligible to be a LIBOR Rate Loan and all payments on the Protective Advances shall be payable to Agent solely for its own account. The Protective Advances and Overadvances shall be repayable on demand, secured by the Agent’s Liens, constitute Obligations hereunder, and bear interest at the rate applicable from time to time to Advances that are Base Rate Loans. The provisions of this Section 2.3(d) are for the exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended to benefit any Borrower in any way.

(e) Settlement. It is agreed that each Lender’s funded portion of the Advances is intended by the Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent, Swing Lender, and the other Lenders agree (which agreement shall not be for the benefit of any Borrower) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among the Lenders as to the Advances, the Swing Loans, and the Protective Advances shall take place on a periodic basis in accordance with the following provisions:

(i) Agent shall request settlement (“Settlement”) with the Lenders on a weekly basis, or on a more frequent basis if so determined by Agent, (1) on behalf of Swing Lender, with respect to each outstanding Swing Loan, (2) for itself, with respect to the outstanding Protective Advances, and (3) with respect to Borrowers’ or their respective Restricted Subsidiaries’ Collections received by Agent, as to each by notifying the Lenders by telecopy, telephone, or other similar form of transmission, of such requested Settlement, no later than 2:00 p.m. (California time) on the Business Day immediately prior to the date of such requested Settlement (the date of such requested Settlement being the “Settlement Date”). Such notice of a Settlement Date shall include a summary statement of the amount of outstanding Advances, Swing Loans, and Protective Advances for the period since the prior Settlement Date. Subject to the terms and conditions contained herein (including Section 2.3(c)(iii)): (y) if a Lender’s balance of the Advances (including Swing Loans and Protective Advances) exceeds such Lender’s Pro Rata Share of the Advances (including Swing

Loans and Protective Advances) as of a Settlement Date, then Agent shall, by no later than 12:00 p.m. (California time) on the Settlement Date, transfer in immediately available funds to a Deposit Account of such Lender (as such Lender may designate), an amount such that each such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances (including Swing Loans and Protective Advances), and (z) if a Lender’s balance of the Advances (including Swing Loans and Protective Advances) is less than such Lender’s Pro Rata Share of the Advances (including Swing Loans and Protective Advances) as of a Settlement Date, such Lender shall no later than 12:00 p.m. (California time) on the Settlement Date transfer in immediately available funds to the Agent’s Account, an amount such that each such Lender shall, upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances (including Swing Loans and Protective Advances). Such amounts made available to Agent under clause (z) of the immediately preceding sentence shall be applied against the amounts of the applicable Swing Loans or Protective Advances and, together with the portion of such Swing Loans or Protective Advances representing Swing Lender’s Pro Rata Share thereof, shall constitute Advances of such Lenders. If any such amount is not made available to Agent by any Lender on the Settlement Date applicable thereto to the extent required by the terms hereof, Agent shall be entitled to recover for its account such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate.

(ii) In determining whether a Lender’s balance of the Advances, Swing Loans, and Protective Advances is less than, equal to, or greater than such Lender’s Pro Rata Share of the Advances, Swing Loans, and Protective Advances as of a Settlement Date, Agent shall, as part of the relevant Settlement, apply to such balance the portion of payments actually received in good funds by Agent with respect to principal, interest, fees payable by Borrowers and allocable to the Lenders hereunder, and proceeds of Collateral. To the extent that a net amount is owed to any such Lender after such application, such net amount shall be distributed by Agent to that Lender as part of such next Settlement.

(iii) Between Settlement Dates, Agent, to the extent no Protective Advances or Swing Loans are outstanding, may pay over to Swing Lender any payments received by Agent, that in accordance with the terms of this Agreement would be applied to the reduction of the Advances, for application to Swing Lender’s Pro Rata Share of the Advances. If, as of any Settlement Date, Collections of Borrowers or their respective Restricted Subsidiaries received by Agent since the then immediately preceding Settlement Date have been applied to Swing Lender’s Pro Rata Share of the Advances other than to Swing Loans, as provided for in the previous sentence, Swing Lender shall pay to Agent for the accounts of the Lenders, and Agent shall pay to the Lenders, to be applied to the outstanding Advances of such Lenders, an amount such that each Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Advances. During the period between Settlement Dates, Swing Lender with respect to Swing Loans, Agent with respect to Protective Advances, and each Lender (subject to the effect of agreements between Agent and individual Lenders) with respect to the Advances other than Swing Loans and Protective Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the daily amount of funds employed by Swing Lender, Agent, or the Lenders, as applicable.

(f) Notation. Agent shall record on its books the principal amount of the Advances owing to each Lender, including the Swing Loans owing to Swing Lender, and Protective Advances owing to Agent, and the interests therein of each Lender, from time to time and such records shall, absent manifest error, conclusively be presumed to be correct and accurate.

(g) Lenders’ Failure to Perform. All Advances (other than Swing Loans and Protective Advances) shall be made by the Lenders contemporaneously and in accordance with their Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Advance (or other extension of credit) hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligations hereunder, and (ii) no failure by any Lender to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder.

2.4 Payments.

(a) Payments by Borrowers.

(i) Except as otherwise expressly provided herein, all payments by Borrowers shall be made to Agent’s Account for the account of the Lender Group and shall be made in immediately available funds, no later than 11:00 a.m. (California time) on the date specified herein. Any payment received by Agent later than 11:00 a.m. (California time), shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue until such following Business Day.

(ii) Unless Agent receives notice from Administrative Borrower prior to the date on which any payment is due to the Lenders that Borrowers will not make such payment in full as and when required, Agent may assume that Borrowers have made (or will make) such payment in full to Agent on such date in immediately available funds and Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent Borrowers do not make such payment in full to Agent on the date when due, each Lender severally shall repay to Agent on demand such amount distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each day from the date such amount is distributed to such Lender until the date repaid.

(b) Apportionment and Application.

(i) Except as otherwise provided with respect to Defaulting Lenders and except as otherwise provided in the Loan Documents (including agreements between Agent and individual Lenders), aggregate principal and interest payments shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Obligations to which such payments relate held by each Lender) and payments of fees and expenses (other than fees or expenses that are for Agent’s separate account, after giving effect to any agreements between Agent and individual Lenders) shall be apportioned ratably among the Lenders having a Pro Rata Share of the Obligation to which a particular fee relates. Except as provided in Section 2.4(b)(iii), all payments shall be remitted to Agent and all such payments, and all proceeds of Collateral received by Agent, shall be applied as follows:

(A) first, ratably to pay any Lender Group Expenses then due to Agent or any of the Lenders under the Loan Documents until paid in full,

(B) second, ratably to pay any fees or premiums then due to Agent (for its separate account, after giving effect to any agreements between Agent and individual Lenders) or any of the Lenders under the Loan Documents until paid in full,

(D) fourth, to pay the principal of all Protective Advances until paid in full,

(E) fifth, ratably to pay interest due in respect of the Advances (other than Protective Advances) and the Swing Loans until paid in full,

(F) sixth, to pay the principal of all Swing Loans until paid in full,

(G) seventh, so long as no Event of Default has occurred and is continuing, to pay the principal of all Advances until paid in full,

(H) eighth, so long as no Event of Default has occurred and is continuing, and at Agent’s election (which election Agent agrees will not be made if an Overadvance would be created thereby), to pay amounts then due and owing by Administrative Borrower or its Subsidiaries in respect of Bank Products, until paid in full,

(I) ninth, if an Event of Default has occurred and is continuing, ratably (i) to pay the principal of all Advances until paid in full, (ii) to Agent, to be held by Agent, for the ratable benefit of Issuing Lender and Lenders, as cash collateral in an amount up to 105% of the Letter of Credit Usage until paid in full, and (iii) to Agent, to be held by Agent, for the benefit of the Bank Product Providers, as cash collateral in an amount up to the amount of the Bank Product Reserve established prior to the occurrence of, and not in contemplation of, the subject Event of Default until the obligations of Borrowers and their respective Restricted Subsidiaries in respect of Bank Products have been paid in full or the cash collateral amount has been exhausted,

(J) tenth, if an Event of Default has occurred and is continuing, to pay any other Obligations and Bank Product Obligations (including the provision of amounts to Agent, to be held by Agent, for the benefit of the Bank Product Providers, as cash collateral in an amount up to the amount determined by Agent in its Permitted Discretion as the amount necessary to secure the obligations of Borrowers and their respective Restricted Subsidiaries in respect of Bank Products), and

(K) eleventh, to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law.

(ii) Agent promptly shall distribute to each Lender, pursuant to the applicable wire instructions received from each Lender in writing, such funds as it may be entitled to receive, subject to a Settlement delay as provided in Section 2.3(e).

(iii) In each instance, so long as no Event of Default has occurred and is continuing, this Section 2.4(b) shall not apply to any payment made by Borrowers to Agent and specified by Borrowers to be for the payment of specific Obligations then due and payable (or prepayable) under any provision of this Agreement.

(iv) For purposes of the foregoing, “paid in full” means payment of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, whether or not any of the foregoing would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.

(v) In the event of a direct conflict between the priority provisions of this Section 2.4 and other provisions contained in any other Loan Document, it is the intention of the parties hereto that such priority provisions in such documents shall be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.4 shall control and govern.

(i) At any time that an Event of Default has occurred and is continuing, subject to Section 5.8(b), upon the receipt by Parent, any Borrower or any of their respective Subsidiaries of Net Cash Proceeds in connection with the sale or disposition by any Loan Party of property or assets pursuant to clauses (l) or (m) of the definition of Permitted Dispositions, Borrowers shall immediately prepay the outstanding principal of the Advances in an amount equal to 100% of such Net Cash Proceeds.

(ii) At any time that an Event of Default has occurred and is continuing, upon the sale or issuance by any Loan Party or any of its Restricted Subsidiaries of any shares of Stock, Borrowers shall immediately prepay the outstanding principal of the Advances in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection therewith.

2.5 Overadvances. If, at any time or for any reason, the amount of Obligations owed by Borrowers to the Lender Group pursuant to Section 2.1 or Section 2.12 is greater than any of the limitations set forth in Section 2.1, Section 2.3 or Section 2.12, as applicable (an “Overadvance”), Borrowers immediately shall pay to Agent, in cash, the amount of such excess, which amount shall be used by Agent to reduce the Obligations in accordance with the priorities set forth in Section 2.4(b); provided, however, that if an Overadvance occurs solely as a result of Agent making a change in the criteria used to determine Eligible Accounts, Eligible Finished Goods Inventory or Eligible Raw Materials Inventory, then Borrowers shall have 3 Business Days to pay Agent, in cash, the amount of such excess. In addition, Borrowers hereby promise to pay the Obligations (including principal, interest, fees, costs, and expenses) in Dollars in full as and when due and payable under the terms of this Agreement and the other Loan Documents.

2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.

(a) Interest Rates. Except as provided in clause (c) below, all Obligations (except for undrawn Letters of Credit) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof as follows: (i) if the relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and (ii) otherwise, at a per annum rate equal to the Base Rate plus the Base Rate Margin.

The foregoing notwithstanding, at no time shall any portion of the Obligations bear interest on the Daily Balance thereof at a per annum rate less than 3.75%. To the extent that interest accrued hereunder at the rate set forth herein would be less than the foregoing minimum daily rate, the interest rate chargeable hereunder for such day automatically shall be deemed increased to the minimum rate.

(b) Letter of Credit Fee. Borrowers shall pay Agent (for the ratable benefit of the Lenders, subject to any agreements between Agent and individual Lenders), a Letter of Credit fee (in addition to the charges, commissions, fees, and costs set forth in Section 2.12(e)) which shall accrue at a rate equal to 2.00% per annum times the Daily Balance of the undrawn amount of all outstanding Letters of Credit.

(c) Default Rate. Upon the occurrence and during the continuation of an Event of Default, but solely at the election of Agent or the Required Lenders,

(i) all Obligations (except for undrawn Letters of Credit) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof at a per annum rate equal to 2 percentage points above the per annum rate otherwise applicable hereunder, and

(ii) the Letter of Credit fee provided for above shall be increased to 2 percentage points above the per annum rate otherwise applicable hereunder.

(d) Payment. Except as provided to the contrary in Section 2.11 or Section 2.13(a), interest, Letter of Credit fees, and all other fees payable hereunder shall be due and payable, in arrears, on the first day of each month during the term hereof. Borrowers hereby authorize Agent, from time to time, without prior notice to Borrowers (except as otherwise specifically provided in any Loan Document), to charge all interest and fees (when due and payable), all Lender Group Expenses (as and when incurred), all charges, commissions, fees, and costs provided for in Section 2.12(e) (as and when accrued or incurred), all fees and costs provided for in Section 2.11 (as and when accrued or incurred), and all other payments as and when due and payable under any Loan Document (including any amounts due and payable to the Bank Product Providers in respect of Bank Products up to the amount of the Bank Product Reserve) to Borrowers’ Loan Account,

which amounts thereafter shall constitute Advances hereunder and shall accrue interest at the rate then applicable to Advances hereunder. Any interest not paid when due shall be compounded by being charged to Borrowers’ Loan Account and shall thereafter constitute Advances hereunder and shall accrue interest at the rate then applicable to Advances that are Base Rate Loans hereunder.

(e) Computation. All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360 day year for the actual number of days elapsed. In the event the Base Rate is changed from time to time hereafter, the rates of interest hereunder based upon the Base Rate automatically and immediately shall be increased or decreased by an amount equal to such change in the Base Rate.

(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the interest rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable. Borrowers and the Lender Group, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of payment stated within it; provided, however, that, anything contained herein to the contrary notwithstanding, if said rate or rates of interest or manner of payment exceeds the maximum allowable under applicable law, then, ipso facto, as of the date of this Agreement, Borrowers are and shall be liable only for the payment of such maximum as allowed by law, and payment received from Borrowers in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations to the extent of such excess.

2.7 Cash Management.

(a) Subject to Section 3.6(b), Borrowers shall and shall cause each of their Restricted Subsidiaries to (i) establish and maintain cash management services of a type and on terms reasonably satisfactory to Agent at one or more of the banks set forth on Schedule 2.7(a) (each a “Cash Management Bank”), and shall request in writing and otherwise take such reasonable steps to ensure that all of their and their Restricted Subsidiaries’ Account Debtors forward payment of the amounts owed by them directly to such Cash Management Bank, and (ii) deposit or cause to be deposited promptly, and in any event no later than the first Business Day after the date of receipt thereof, all of their Collections (including those sent directly by their Account Debtors to Borrowers or their Restricted Subsidiaries) into a bank account in Agent’s name (a “Cash Management Account”) at one of the Cash Management Banks.

(b) Each Cash Management Bank shall establish and maintain Cash Management Agreements with Agent and Borrowers, in form and substance reasonably acceptable to Agent. Each such Cash Management Agreement shall provide, among other things, that (i) the Cash Management Bank will comply with any instructions (each, a “Cash Disposition Instruction”), originated by Agent directing the disposition of the funds in such Cash Management Account without further consent by a Borrower or its Restricted Subsidiary, as applicable, (ii) the Cash Management Bank has no rights of setoff or recoupment or any other claim against the applicable Cash Management Account, other than for payment of its service fees and other charges directly related to the administration of such Cash Management Account and for returned checks or other items of payment, (iii) at any time after which the Agent so instructs such Cash Management Bank (a “Cash Sweep Instruction”), it immediately will forward by daily sweep all amounts in the applicable Cash Management Account to the Agent’s Account until such time (if any) as Agent notifies it that the Cash Sweep Instruction is terminated pursuant to the last sentence of this Section 2.7(b); and (iv) if clause (iii) is not applicable, then Agent shall direct the Cash Management bank to immediately transfer all such amounts to Borrowers’ Designated Account. Agent may issue a Cash Sweep Instruction or Cash Disposition Instruction only on or after any date that: (x) an Event of Default shall have occurred and be continuing or (y) the Borrowers’ average Excess Availability during any consecutive 30-day period is less than $10,000,000. Agent shall terminate a Cash Sweep Instruction by issuing new instructions to the Cash Management Bank within three (3) Business Days after Borrowers’ average Excess Availability during any consecutive 30-day period exceeds $10,000,000; provided, however, that in no event shall Agent be required to terminate a Cash Sweep Instruction more than three (3) times during any consecutive twelve (12) month period.

(c) So long as no Default or Event of Default has occurred and is continuing, Administrative Borrower may amend Schedule 2.7(a) to add or replace a Cash Management Bank or Cash Management Account; provided, however, that (i) such prospective Cash Management Bank shall be reasonably satisfactory to Agent, and (ii) prior to the time of the opening of such Cash Management Account, a Borrower or its Restricted Subsidiary, as applicable, and such prospective Cash Management Bank shall have executed and delivered to Agent a Cash Management Agreement. Borrowers (or their Restricted Subsidiaries, as applicable) shall close any of their Cash Management Accounts (and establish replacement cash management accounts in accordance with the foregoing sentence) promptly and in any event within 45 days of notice from Agent that the creditworthiness of any Cash Management Bank is no longer acceptable in Agent’s reasonable judgment, or as promptly as practicable and in any event within 75 days of notice from Agent that the operating performance, funds transfer, or availability procedures or performance of the Cash Management Bank with respect to Cash Management Accounts or Agent’s liability under any Cash Management Agreement with such Cash Management Bank is no longer acceptable in Agent’s reasonable judgment.

(d) The Cash Management Accounts shall be cash collateral accounts subject to Control Agreements.

(e) Notwithstanding anything to the contrary contained herein, Agent acknowledges that the Cash Management Accounts may contain from time to time Trust Funds (as defined below), which, by law, Borrowers and their Subsidiaries are required to collect and remit from time to time but which, pending such remittance, shall be contained or held in the Cash Management Accounts. Upon Agent’s delivery of a Cash Sweep Instruction, Cash Disposition Instruction or any other exercise of control by Agent under a Control Agreement or a Cash Management Agreement, Agent agrees to notify Borrowers and their Subsidiaries of such exercise (which notice may be by delivery of a copy of such Cash Sweep Instruction, if any). Upon receipt of such notice, Borrowers and their Subsidiaries shall send written notice to Agent certifying the type and amount of any Trust Funds contained or held in the Cash Management Accounts. Within 3 Business Days after receipt of such notice by Agent, Agent shall remit the amount of the Trust Funds to Borrowers and their Subsidiaries for payment to the appropriate Person; provided, that, during such 3 Business Day period, Agent shall have the right to ask for further clarification, verification or other supporting documentation with respect to any such type or amount certified by Borrowers or their Subsidiaries as constituting Trust Funds and Agent shall not be required to remit the amount of such Trust Funds so certified unless and until Agent is reasonably satisfied as to such clarification, verification or other supporting documentation. For the purposes of this Agreement, “Trust Funds” means all funds held by Borrowers and their Subsidiaries, as a fiduciary, all taxes required to be collected or withheld (including, without limitation, federal and state withholding taxes (including the employer’s share thereof), taxes owing to any governmental unit thereof, sales, use and excise taxes, customs duties, import duties and independent customs brokers’ charges), other taxes for which Borrowers and their Subsidiaries may become liable, and accrued and unpaid employee compensation (including salaries, wages, benefits and expense reimbursements).

2.8 Crediting Payments. The receipt of any payment item by Agent (whether from transfers to Agent by the Cash Management Banks pursuant to the Cash Management Agreements or otherwise) shall not be considered a payment on account unless such payment item is a wire transfer of immediately available federal funds made to the Agent’s Account or unless and until such payment item is honored when presented for payment. Should any payment item not be honored when presented for payment, then Borrowers shall be deemed not to have made such payment and interest shall be calculated accordingly. Anything to the contrary contained herein notwithstanding, any payment item shall be deemed received by Agent only if it is received into the Agent’s Account on a Business Day on or before 11:00 a.m. (California time). If any payment item is received into the Agent’s Account on a non-Business Day or after 11:00 a.m. (California time) on a Business Day, it shall be deemed to have been received by Agent as of the opening of business on the immediately following Business Day.

2.9 Designated Account. Agent is authorized to make the Advances, and Issuing Lender is authorized to issue the Letters of Credit, under this Agreement based upon telephonic or other instructions

received from anyone purporting to be an Authorized Person or, without instructions, if pursuant to Section 2.6(d). Administrative Borrower agrees to establish and maintain the Designated Account with the Designated Account Bank for the purpose of receiving the proceeds of the Advances requested by Borrowers and made by Agent or the Lenders hereunder. Unless otherwise agreed by Agent and Administrative Borrower, any Advance, Protective Advance, or Swing Loan requested by Borrowers and made by Agent or the Lenders hereunder shall be made to the Designated Account.

2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall maintain an account on its books in the name of Borrowers (the “Loan Account”) on which Borrowers will be charged with all Advances (including Protective Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrowers or for Borrowers’ account, the Letters of Credit issued by Issuing Lender for Borrowers’ account, and with all other payment Obligations hereunder or under the other Loan Documents, including, accrued interest, fees and expenses, and Lender Group Expenses. In accordance with Section 2.8, the Loan Account will be credited with all payments received by Agent from Borrowers or for Borrowers’ account, including all amounts received in the Agent’s Account from any Cash Management Bank. In accordance with Section 2.6(d), Agent shall render statements regarding the Loan Account to Administrative Borrower, including principal, interest, fees, and including an itemization of all charges and expenses constituting Lender Group Expenses owing, and such statements, absent manifest error, shall be conclusively presumed to be correct and accurate and constitute an account stated between Borrowers and the Lender Group unless, within 30 days after receipt thereof by Administrative Borrower, Administrative Borrower shall deliver to Agent written objection thereto describing the error or errors contained in any such statements.

2.11 Fees. Borrowers shall pay to Agent, as and when due and payable under the terms of the Fee Letter, the fees set forth in the Fee Letter.

2.12 Letters of Credit.

(a) Subject to the terms and conditions of this Agreement, the Issuing Lender agrees to issue letters of credit for the account of Borrowers (each, an “L/C”) or to purchase participations or execute indemnities or reimbursement obligations (each such undertaking, an “L/C Undertaking”) with respect to letters of credit issued by an Underlying Issuer (as of the Closing Date, the prospective Underlying Issuer is to be Wells Fargo) for the account of Borrowers. Each request for the issuance of a Letter of Credit or the amendment, renewal, or extension of any outstanding Letter of Credit shall be made in writing by an Authorized Person and delivered to the Issuing Lender and Agent via hand delivery, telefacsimile, or other electronic method of transmission reasonably in advance of the requested date of issuance, amendment, renewal, or extension. Each such request shall be in form and substance satisfactory to the Issuing Lender in its reasonable discretion and shall specify (i) the amount of such Letter of Credit, (ii) the date of issuance, amendment, renewal, or extension of such Letter of Credit, (iii) the expiration date of such Letter of Credit, (iv) the name and address of the beneficiary thereof (or the beneficiary of the Underlying Letter of Credit, as applicable), and (v) such other information (including, in the case of an amendment, renewal, or extension, identification of the outstanding Letter of Credit to be so amended, renewed, or extended) as shall be necessary to prepare, amend, renew, or extend such Letter of Credit. If requested by the Issuing Lender, Borrowers also shall be an applicant under the application with respect to any Underlying Letter of Credit that is to be the subject of an L/C Undertaking. The Issuing Lender shall have no obligation to issue a Letter of Credit if any of the following would result after giving effect to the issuance of such requested Letter of Credit:

(i) the Letter of Credit Usage would exceed the Borrowing Base less the outstanding amount of Advances, or

(ii) the Letter of Credit Usage would exceed $10,000,000, or

(iii) the Letter of Credit Usage would exceed the Maximum Revolver Amount less the outstanding amount of Advances.

Borrowers and the Lender Group acknowledge and agree that certain Underlying Letters of Credit may be issued to support letters of credit that already are outstanding as of the Closing Date. Each Letter of Credit (and corresponding Underlying Letter of Credit) shall be in form and substance acceptable to the Issuing Lender (in the exercise of its reasonable discretion), including the requirement that the amounts payable thereunder must be payable in Dollars. If Issuing Lender is obligated to advance funds under a Letter of Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing Lender upon receiving written or telephonic notice of such L/C Disbursement by paying to Agent an amount equal to such L/C Disbursement not later than 11:00 a.m., California time, on the date that such L/C Disbursement is made, provided, that Administrative Borrower has received written or telephonic notice of such L/C Disbursement prior to 10:00 a.m., California time, on such date, or, if such notice has not been received by Administrative Borrower prior to such time on such date, then not later than 11:00 a.m., California time, on the Business Day immediately following the day that Administrative Borrower receives such notice, pursuant to the foregoing, and, in the absence of such reimbursement, the L/C Disbursement immediately and automatically shall be deemed to be an Advance hereunder and, thereafter, shall bear interest at the rate then applicable to Advances that are Base Rate Loans under Section 2.6. To the extent an L/C Disbursement is deemed to be an Advance hereunder, Borrowers’ obligation to reimburse such L/C Disbursement shall be discharged and replaced by the resulting Advance. Promptly following receipt by Agent of any payment from Borrowers pursuant to this paragraph, Agent shall distribute such payment to the Issuing Lender or, to the extent that Lenders have made payments pursuant to Section 2.12(c) to reimburse the Issuing Lender, then to such Lenders and the Issuing Lender as their interests may appear.

(b) Promptly following receipt of a notice of L/C Disbursement pursuant to Section 2.12(a), each Lender agrees to fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing subsection on the same terms and conditions as if Borrowers had requested such Advance and Agent shall promptly pay to Issuing Lender the amounts so received by it from the Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Lender or the Lenders, the Issuing Lender shall be deemed to have granted to each Lender, and each Lender shall be deemed to have purchased, a participation in each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and each such Lender agrees to pay to Agent, for the account of the Issuing Lender, such Lender’s Pro Rata Share of any payments made by the Issuing Lender under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to Agent, for the account of the Issuing Lender, such Lender’s Pro Rata Share of each L/C Disbursement made by the Issuing Lender and not reimbursed by Borrowers on the date due as provided in clause (a) of this Section, or of any reimbursement payment required to be refunded to Borrowers for any reason. Each Lender acknowledges and agrees that its obligation to deliver to Agent, for the account of the Issuing Lender, an amount equal to its respective Pro Rata Share of each L/C Disbursement made by the Issuing Lender pursuant to this Section 2.12(b) shall be absolute and unconditional and such remittance shall be made notwithstanding the occurrence or continuation of an Event of Default or Default or the failure to satisfy any condition set forth in Section 3 hereof. If any such Lender fails to make available to Agent the amount of such Lender’s Pro Rata Share of each L/C Disbursement made by the Issuing Lender in respect of such Letter of Credit as provided in this Section, such Lender shall be deemed to be a Defaulting Lender and Agent (for the account of the Issuing Lender) shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate until paid in full.

(c) Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group harmless from any loss, cost, expense, or liability, and reasonable attorneys fees incurred by the Lender Group arising out of or in connection with any Letter of Credit; provided, however, that no Borrower shall be obligated hereunder to indemnify for any loss, cost, expense, or liability to the extent that it is caused by the gross negligence or willful misconduct of the Issuing Lender or any other member of the Lender Group. Each Borrower agrees to be bound by the Underlying Issuer’s regulations and interpretations of any Underlying Letter of Credit or by Issuing Lender’s interpretations of any L/C issued by Issuing Lender to or for such Borrower’s account, even though this interpretation may be different from such Borrower’s own, and each

Borrower understands and agrees that the Lender Group shall not be liable for any error, negligence, or mistake, whether of omission or commission, in following Borrowers’ instructions or those contained in the Letter of Credit or any modifications, amendments, or supplements thereto. Each Borrower understands that the L/C Undertakings may require Issuing Lender to indemnify the Underlying Issuer for certain costs or liabilities arising out of claims by Borrowers against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group harmless with respect to any loss, cost, expense (including reasonable attorneys fees), or liability incurred by the Lender Group under any L/C Undertaking as a result of the Lender Group’s indemnification of any Underlying Issuer; provided, however, that no Borrower shall be obligated hereunder to indemnify for any loss, cost, expense, or liability to the extent that it is caused by the gross negligence or willful misconduct of the Issuing Lender or any other member of the Lender Group. Each Borrower hereby acknowledges and agrees that neither the Lender Group nor the Issuing Lender shall be responsible for delays, errors, or omissions resulting from the malfunction of equipment in connection with any Letter of Credit.

(d) Each Borrower hereby authorizes and directs any Underlying Issuer to deliver to the Issuing Lender all instruments, documents, and other writings and property received by such Underlying Issuer pursuant to such Underlying Letter of Credit and to accept and rely upon the Issuing Lender’s instructions with respect to all matters arising in connection with such Underlying Letter of Credit and the related application.

(e) Any and all issuance charges, commissions, fees, and costs incurred by the Issuing Lender relating to Underlying Letters of Credit shall be Lender Group Expenses for purposes of this Agreement and immediately shall be reimbursable by Borrowers to Agent for the account of the Issuing Lender; it being acknowledged and agreed by each Borrower that, as of the Closing Date, the issuance charge imposed by the prospective Underlying Issuer is .825% per annum times the face amount of each Underlying Letter of Credit, that such issuance charge may be changed from time to time, and that the Underlying Issuer also imposes a schedule of charges for amendments, extensions, drawings, and renewals.

(f) If by reason of (i) any change after the Closing Date in any applicable law, treaty, rule, or regulation or any change in the interpretation or application thereof by any Governmental Authority, or (ii) compliance by the Underlying Issuer or the Lender Group with any direction, request, or requirement (irrespective of whether having the force of law) of any Governmental Authority or monetary authority including, Regulation D of the Federal Reserve Board as from time to time in effect (and any successor thereto):

(i) any reserve, deposit, or similar requirement is or shall be imposed or modified in respect of any Letter of Credit issued hereunder, or

(ii) there shall be imposed on the Underlying Issuer or the Lender Group any other condition regarding any Underlying Letter of Credit or any Letter of Credit issued pursuant hereto;

and the result of the foregoing is to increase, directly or indirectly, the cost to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter of Credit or to reduce the amount receivable in respect thereof by the Lender Group, then, and in any such case, Agent may, at any time within a reasonable period after the additional cost is incurred or the amount received is reduced, notify Administrative Borrower, and Borrowers shall pay on demand such amounts as Agent may specify to be necessary to compensate the Lender Group for such additional cost or reduced receipt, together with interest on such amount from the date of such demand until payment in full thereof at the rate then applicable to Base Rate Loans hereunder. The determination by Agent of any amount due pursuant to this Section, as set forth in a certificate setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error, be final and conclusive and binding on all of the parties hereto.

2.13 LIBOR Option.

(a) Interest and Interest Payment Dates. In lieu of having interest charged at the rate based upon the Base Rate, Borrowers shall have the option (the “LIBOR Option”) to have interest on all or a portion of the Advances be charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the last day of the Interest Period applicable thereto (provided, however, that, subject to the following clauses (ii) and (iii), in the case of any Interest Period greater than 3 months in duration, interest shall be payable at 3 month intervals after the commencement of the applicable Interest Period and on the last day of such Interest Period), (ii) the occurrence of an Event of Default in consequence of which the Required Lenders or Agent on behalf thereof have elected to accelerate the maturity of all or any portion of the Obligations, or (iii) termination of this Agreement pursuant to the terms hereof. On the last day of each applicable Interest Period, unless Administrative Borrower properly has exercised the LIBOR Option with respect thereto, the interest rate applicable to such LIBOR Rate Loan automatically shall convert to the rate of interest then applicable to Base Rate Loans of the same type hereunder. At any time that an Event of Default has occurred and is continuing, Borrowers no longer shall have the option to request that Advances bear interest at a rate based upon the LIBOR Rate and Agent shall have the right to convert the interest rate on all outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans hereunder.

(b) LIBOR Election.

(i) Administrative Borrower may, at any time and from time to time, so long as no Event of Default has occurred and is continuing, elect to exercise the LIBOR Option by notifying Agent prior to 11:00 a.m. (California time) at least 3 Business Days prior to the commencement of the proposed Interest Period (the “LIBOR Deadline”). Notice of Administrative Borrower’s election of the LIBOR Option for a permitted portion of the Advances and an Interest Period pursuant to this Section shall be made by delivery to Agent of a LIBOR Notice received by Agent before the LIBOR Deadline, or by telephonic notice received by Agent before the LIBOR Deadline (to be confirmed by delivery to Agent of a LIBOR Notice received by Agent prior to 5:00 p.m. (California time) on the same day). Promptly upon its receipt of each such LIBOR Notice, Agent shall provide a copy thereof to each of the Lenders.

(ii) Each LIBOR Notice shall be irrevocable and binding on Borrowers. In connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend, and hold Agent and the Lenders harmless against any loss, cost, or expense incurred by Agent or any Lender as a result of (A) the payment of any principal of any LIBOR Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (B) the conversion of any LIBOR Rate Loan other than on the last day of the Interest Period applicable thereto, or (C) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered pursuant hereto (such losses, costs, and expenses, collectively, “Funding Losses”). Funding Losses shall, with respect to Agent or any Lender, be deemed to equal the amount determined by Agent or such Lender to be the excess, if any, of (1) the amount of interest that would have accrued on the principal amount of such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate that would have been applicable thereto, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period therefor), minus (2) the amount of interest that would accrue on such principal amount for such period at the interest rate which Agent or such Lender would be offered were it to be offered, at the commencement of such period, Dollar deposits of a comparable amount and period in the London interbank market. A certificate of Agent or a Lender delivered to Administrative Borrower setting forth any amount or amounts that Agent or such Lender is entitled to receive pursuant to this Section 2.13 shall be conclusive absent manifest error unless the Administrative Borrower shall object in writing within seven (7) Business Days of receipt thereof, specifying the basis for such objection in detail.

(iii) Borrowers shall have not more than 5 LIBOR Rate Loans in effect at any given time. Borrowers only may exercise the LIBOR Option for LIBOR Rate Loans of at least $1,000,000 and integral multiples of $500,000 in excess thereof.

(c) Prepayments. Borrowers may prepay LIBOR Rate Loans or convert such Loans to Base Rate Loans at any time; provided, however, that in the event that LIBOR Rate Loans are so prepaid or converted on any date that is not the last day of the Interest Period applicable thereto, including as a result of any automatic prepayment through the required application by Agent of proceeds of Borrowers’ and their respective Restricted Subsidiaries’ Collections in accordance with Section 2.4(b) or for any other reason, including early termination of the term of this Agreement or acceleration of all or any portion of the Obligations pursuant to the terms hereof, each Borrower shall indemnify, defend, and hold Agent and the Lenders and their Participants harmless against any and all Funding Losses in accordance with clause (b)(ii) above.

(d) Special Provisions Applicable to LIBOR Rate.

(i) The LIBOR Rate may be adjusted by Agent with respect to any Lender on a prospective basis to take into account any additional or increased costs to such Lender of maintaining or obtaining any eurodollar deposits or increased costs, in each case, due to changes in applicable law occurring subsequent to the commencement of the then applicable Interest Period, including changes in tax laws (except changes of general applicability in tax laws relating to taxes based on income, profits, receipts or capital) and changes in the reserve requirements imposed by the Board of Governors of the Federal Reserve System (or any successor), excluding the Reserve Percentage, which additional or increased costs would increase the cost of funding loans bearing interest at the LIBOR Rate. In any such event, the affected Lender shall give Administrative Borrower and Agent notice of such a determination and adjustment and Agent promptly shall transmit the notice to each other Lender and, upon its receipt of the notice from the affected Lender, Administrative Borrower may, by notice to such affected Lender (y) require such Lender to furnish to Administrative Borrower a statement setting forth the basis for adjusting such LIBOR Rate and the method for determining the amount of such adjustment accompanied by a certificate of such Lender stating that it is charging such similar increased costs to similarly situated borrowers, or (z) repay the LIBOR Rate Loans with respect to which such adjustment is made (together with any amounts due under clause (b)(ii) above).

(ii) In the event that any change in market conditions or any law, regulation, treaty, or directive, or any change therein or in the interpretation of application thereof, shall at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical for such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or maintaining, or to determine or charge interest rates at the LIBOR Rate, such Lender shall give notice of such changed circumstances to Agent and Administrative Borrower and Agent promptly shall transmit the notice to each other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are outstanding, the date specified in such Lender’s notice shall be deemed to be the last day of the Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate then applicable to Base Rate Loans, and (z) Borrowers shall not be entitled to elect the LIBOR Option until such Lender determines that it would no longer be unlawful or impractical to do so.

(e) No Requirement of Matched Funding. Anything to the contrary contained herein notwithstanding, neither Agent, nor any Lender, nor any of their Participants, is required actually to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest accrues at the LIBOR Rate. The provisions of this Section shall apply as if each Lender or its Participants had match funded any Obligation as to which interest is accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the amount of the LIBOR Rate Loans.

2.14 Capital Requirements. If, after the date hereof, either (i) the adoption of or change in any law, rule, regulation or guideline regarding capital requirements for banks or bank holding companies, or any

change in the interpretation or application thereof by any Governmental Authority charged with the administration thereof, or (ii) compliance by any Lender or its parent bank holding company with any guideline, request or directive of any such entity regarding capital adequacy (whether or not having the force of law), has the effect of reducing the return on such Lender’s or such holding company’s capital as a consequence of such Lender’s Commitments hereunder to a level below that which such Lender or such holding company could have achieved but for such adoption, change, or compliance (taking into consideration such Lender’s or such holding company’s then existing policies with respect to capital adequacy and assuming the full utilization of such entity’s capital) by any amount deemed in good faith by such Lender to be material and the result is an increase in the cost to any Lender of funding or maintaining any Advances to Borrowers, then such Lender may notify Administrative Borrower and Agent thereof. Following receipt of such notice, Borrowers agree to pay such Lender on demand the amount of such reduction of return of capital as and when such reduction is determined, payable within 90 days after presentation by such Lender of a statement in the amount and setting forth in reasonable detail such Lender’s calculation thereof and the assumptions upon which such calculation was based (which statement shall be deemed true and correct absent manifest error). In determining such amount, such Lender may use any reasonable averaging and attribution methods.

2.15 Joint and Several Liability of Borrowers.

(a) Each Borrower is accepting joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by the Lender Group under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower and in consideration of the undertakings of the other Borrowers to accept joint and several liability for the Obligations.

(b) Each Borrower, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers, with respect to the payment and performance of all of the Obligations (including, without limitation, any Obligations arising under this Section 2.15), it being the intention of the parties hereto that all the Obligations shall be the joint and several obligations of each Borrower without preferences or distinction among them.

(c) If and to the extent that any Borrower shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event the other Borrowers will make such payment with respect to, or perform, such Obligation.

(d) The Obligations of each Borrower under the provisions of this Section 2.15 constitute the absolute and unconditional, full recourse Obligations of each Borrower enforceable against each Borrower to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of this Agreement or any other circumstances whatsoever.

(e) Except as otherwise expressly provided in this Agreement, each Borrower hereby waives notice of acceptance of its joint and several liability, notice of any Advances or Letters of Credit issued under or pursuant to this Agreement, notice of the occurrence of any Default, Event of Default, or of any demand for any payment under this Agreement, notice of any action at any time taken or omitted by Agent or Lenders under or in respect of any of the Obligations, any requirement of diligence or to mitigate damages and, generally, to the extent permitted by applicable law, all demands, notices and other formalities of every kind in connection with this Agreement (except as otherwise provided in this Agreement). Each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by Agent or Lenders at any time or times in respect of any default by any Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations or the addition, substitution or release, in whole or in part, of any Borrower. Without limiting the generality of the foregoing, each Borrower assents to any other action or

delay in acting or failure to act on the part of any Agent or Lender with respect to the failure by any Borrower to comply with any of its respective Obligations, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this Section 2.15 afford grounds for terminating, discharging or relieving any Borrower, in whole or in part, from any of its Obligations under this Section 2.15, it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of each Borrower under this Section 2.15 shall not be discharged except by performance and then only to the extent of such performance. The Obligations of each Borrower under this Section 2.15 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any Borrower or any Agent or Lender.

(f) Each Borrower represents and warrants to Agent and Lenders that such Borrower is currently informed of the financial condition of Borrowers and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each Borrower further represents and warrants to Agent and Lenders that such Borrower has read and understands the terms and conditions of the Loan Documents. Each Borrower hereby covenants that such Borrower will continue to keep informed of Borrowers’ financial condition, the financial condition of other guarantors, if any, and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Obligations.

(g) Each Borrower waives all rights and defenses arising out of an election of remedies by Agent or any Lender, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed Agent’s or such Lender’s rights of subrogation and reimbursement against such Borrower by the operation of Section 580(d) of the California Code of Civil Procedure or otherwise.

(h) Each Borrower waives all rights and defenses that such Borrower may have because the Obligations are secured by Real Property. This means, among other things:

(i) Agent and Lenders may collect from such Borrower without first foreclosing on any Collateral pledged by Borrowers.

(ii) If Agent or any Lender forecloses on any Real Property Collateral pledged by Borrowers:

(A) The amount of the Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price.

(B) Agent and Lenders may collect from such Borrower even if Agent or Lenders, by foreclosing on the Real Property Collateral, has destroyed any right such Borrower may have to collect from the other Borrowers.

This is an unconditional and irrevocable waiver of any rights and defenses such Borrower may have because the Obligations are secured by Real Property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure.

(i) The provisions of this Section 2.15 are made for the benefit of Agent, Lenders and their respective successors and assigns, and may be enforced by it or them from time to time against any or all Borrowers as often as occasion therefor may arise and without requirement on the part of any such Agent, Lender, successor or assign first to marshal any of its or their claims or to exercise any of its or their rights against any Borrower or to exhaust any remedies available to it or them against any Borrower or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 2.15 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully satisfied. If at any time, any payment, or any part thereof, made in respect of any

of the Obligations, is rescinded or must otherwise be restored or returned by any Agent or Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the provisions of this Section 2.15 will forthwith be reinstated in effect, as though such payment had not been made.

(j) Each Borrower hereby agrees that it will not enforce any of its rights of contribution or subrogation against any other Borrower with respect to any liability incurred by it hereunder or under any of the other Loan Documents, any payments made by it to Agent or Lenders with respect to any of the Obligations or any collateral security therefor until such time as all of the Obligations have been paid in full in cash. Any claim which any Borrower may have against any other Borrower with respect to any payments to any Agent or Lender hereunder or under any other Loan Documents are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar proceeding under the laws of any jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary, all such Obligations shall be paid in full in cash before any payment or distribution of any character, whether in cash, securities or other property, shall be made to any other Borrower therefor.

(k) Each Borrower hereby agrees that, after the occurrence and during the continuance of any Default or Event of Default, the payment of any amounts due with respect to the indebtedness owing by any Borrower to any other Borrower is hereby subordinated to the prior payment in full in cash of the Obligations. Each Borrower hereby agrees that after the occurrence and during the continuance of any Default or Event of Default, such Borrower will not demand, sue for or otherwise attempt to collect any indebtedness of any other Borrower owing to such Borrower until the Obligations shall have been paid in full in cash. If, notwithstanding the foregoing sentence, such Borrower shall collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected, enforced and received by such Borrower as trustee for Agent, and such Borrower shall deliver any such amounts to Agent for application to the Obligations in accordance with Section 2.4(b).

3. CONDITIONS; TERM OF AGREEMENT.

3.1 Conditions Precedent to the Initial Extension of Credit. The obligation of each Lender to make its initial extension of credit provided for hereunder, is subject to the fulfillment, to the satisfaction of Agent and each Lender of each of the conditions precedent set forth on Schedule 3.1 (the making of such initial extension of credit by a Lender being conclusively deemed to be its satisfaction or waiver of the conditions precedent).

3.2 Conditions Precedent to all Extensions of Credit. The obligation of the Lender Group (or any member thereof) to make any Advances hereunder at any time (or to extend any other credit hereunder) shall be subject to the following conditions precedent:

(a) the representations and warranties contained in this Agreement and in the other Loan Documents shall be true and correct in all material respects on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date);

(b) no Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof;

(c) no injunction, writ, restraining order, or other order of any nature restricting or prohibiting, directly or indirectly, the extending of such credit shall have been issued and remain in force by any Governmental Authority against any Borrower, Agent, any Lender, or any of their Affiliates; and

(d) no Material Adverse Change shall have occurred.

3.3 Term. This Agreement shall continue in full force and effect for a term ending on the fifth anniversary of the date hereof (the “Maturity Date”). The foregoing notwithstanding, the Lender Group, upon the election of the Required Lenders, shall have the right to terminate its obligations under this Agreement immediately and without notice upon the occurrence and during the continuation of an Event of Default.

3.4 Effect of Termination. On the date of termination of this Agreement, all Obligations (including contingent reimbursement obligations of Borrowers with respect to outstanding Letters of Credit) and Bank Product Obligations immediately shall become due and payable without notice or demand and Borrowers agree to (a) either (i) provide cash collateral to be held by Agent for the benefit of those Lenders in an amount equal to 105% of the Letter of Credit Usage, or (ii) cause the original Letters of Credit to be returned to the Issuing Lender, and (b) provide cash collateral or other security reasonably satisfactory to Agent (in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to the Bank Product Obligations). No termination of this Agreement, however, shall relieve or discharge Borrowers or their respective Restricted Subsidiaries of their duties, Obligations, Bank Product Obligations, or covenants hereunder or under any other Loan Document and the Agent’s Liens in the Collateral shall remain in effect until all Obligations and Bank Product Obligations have been paid in full and the Lender Group’s obligations to provide additional credit hereunder have been terminated. When this Agreement has been terminated and all of the Obligations and Bank Product Obligations have been paid in full and the Lender Group’s obligations to provide additional credit under the Loan Documents have been terminated irrevocably, Agent will, at Borrowers’ sole expense, execute and deliver any termination statements, lien releases, mortgage releases, re-assignments of trademarks, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as are reasonably necessary to release, as of record, the Agent’s Liens and all notices of security interests and liens previously filed by Agent with respect to the Obligations and Bank Product Obligations.

3.5 Early Termination by Borrowers. Borrowers have the option, at any time upon 30 days prior written notice by Administrative Borrower to Agent, to terminate this Agreement by paying to Agent, in cash, the Obligations and the Bank Product Obligations (including (a) either (i) providing cash collateral to be held by Agent for the benefit of those Lenders in an amount equal to 105% of the Letter of Credit Usage, or (ii) causing the original Letters of Credit to be returned to the Issuing Lender, and (b) providing cash collateral or other security reasonably satisfactory to Agent (in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to the Bank Products Obligations), in full, together with the Applicable Prepayment Premium. If Administrative Borrower has sent a notice of termination pursuant to the provisions of this Section, then, absent an agreement to the contrary contained in any Loan Document, the Commitments shall terminate and Borrowers shall be obligated to repay the Obligations and the Bank Product Obligations (including (a) either (i) providing cash collateral to be held by Agent for the benefit of those Lenders in an amount equal to 105% of the Letter of Credit Usage, or (ii) causing the original Letters of Credit to be returned to the Issuing Lender, and (b) providing cash collateral or other security reasonably satisfactory to Agent (in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to the Bank Products Obligations), in full, together with the Applicable Prepayment Premium, on the date set forth as the date of termination of this Agreement in such notice.

3.6 Conditions Subsequent to the Initial Extension of Credit. The obligation of the Lender Group (or any member thereof) to continue to make Advances (or otherwise extend credit hereunder) is subject to the fulfillment, on or before the date applicable thereto, of each of the conditions subsequent set forth below (the failure by Borrowers to so perform or cause to be performed constituting an Event of Default):

(a) within 30 days after the Closing Date, Borrowers shall have delivered to Agent certified copies of the policies of insurance, together with the endorsements thereto, as are required by Section 5.8, the form and substance of which shall be reasonably satisfactory to Agent and its counsel;

(b) within 45 days after the Closing Date, Borrowers shall deliver to Agent Cash Management Agreements and Control Agreements, in form and substance reasonably satisfactory to Agent;

(c) within 90 days after the Closing Date, Borrowers shall use their commercially reasonable efforts to deliver to Agent Collateral Access Agreements with respect to all leased locations, including, without limitation, the following locations: Niagara International Trade Center, 2221 Niagara Falls Boulevard, Wheatfield, New York; 701 I-85 North, Charlotte, North Carolina; 14 Hayward Street, Quincy, Massachusetts; and 16319 Arthur Street, Cerritos, California (it being understood and agreed that Agent may, in its Permitted Discretion, take a reserve for rent payable in respect of any leased location for which a Collateral Access Agreement is not so obtained);

(d) within 5 days (or, in the case of clause (iv) below, 10 days) after the Closing Date, Borrowers shall deliver to Agent the following certificates representing shares of Stock pledged under the Security Agreement, as well as Stock powers with respect thereto endorsed in blank: (i) Certificate #5 for 65 Common Shares of 3091780 Nova Scotia Company, (ii) Certificate #7 for 65 Common Shares of 3091780 Nova Scotia Company, (iii) Certificate #102 for 10 shares of Kilian Manufacturing Corporation, and (iv) a certificate representing 65% of the Stock of Warner Electric UK Group Ltd.; and

(e) within 60 days after the Closing Date, the following conditions shall have been satisfied with respect to all Real Property Collateral (other than the Real Property Collateral located in the State of New York): (a) Agent shall have been granted a first priority Mortgage on such Real Property Collateral; (b) Agent shall have received mortgagee title insurance policies (or marked commitments to issue the same) for such Real Property Collateral issued by a title insurance company reasonably satisfactory to Agent in an amount reasonably satisfactory to Agent assuring Agent that the Mortgage on such Real Property Collateral is a valid and enforceable first priority mortgage Lien on such Real Property Collateral free and clear of all defects and encumbrances except Permitted Liens, and such mortgagee title insurance policies (or marked commitments to issue the same) otherwise shall be in form and substance reasonably satisfactory to Agent; (c) Borrowers and their Subsidiaries shall have paid to said title insurance company all expenses and premiums of said title insurance company in connection with the issuance of such mortgagee title insurance policies (or marked commitments to issue the same) and in addition shall, to the extent required, have paid all recording costs, stamp taxes, mortgage taxes, intangibles taxes and other fees and costs (including reasonable attorneys fees and expenses) incurred in connection therewith; and (d) Agent shall have received such other documentation and opinions of counsel, in form and substance reasonably satisfactory to Agent, in connection with the grant of such Mortgage as Agent shall request in its Permitted Discretion, including, without limitation, surveys (or existing surveys and survey affidavits that are (x) sufficient to have the “matters that would be shown on a survey” exception deleted from the mortgagee policy of title insurance and (y) reasonably satisfactory to Agent), financing statements and fixture filings.

4. REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, each Borrower makes the following representations and warranties to the Lender Group which shall be true, correct, and complete, in all material respects, as of the date hereof, and shall be true, correct, and complete, in all material respects, as of the Closing Date, and at and as of the date of the making of each Advance (or other extension of credit) made thereafter, as though made on and as of the date of such Advance (or other extension of credit) (except to the extent that such representations and warranties relate solely to an earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement:

4.1 No Encumbrances. Borrowers and their respective Restricted Subsidiaries have good and indefeasible title to, or a valid leasehold interest in, their material personal property assets and good and marketable title to, or a valid leasehold interest in, their Real Property, in each case, free and clear of Liens except for Permitted Liens.

4.2 Eligible Accounts. As to each Account that is identified by a Borrower as an Eligible Account in a borrowing base report submitted to Agent, such Account is (a) a bona fide existing payment obligation of the applicable Account Debtors created by the sale and delivery of Inventory or the rendition of services to such Account Debtors in the ordinary course of Borrowers’ business, (b) owed to Borrowers without any known defenses, disputes, offsets, counterclaims, or rights of cancellation, and (c) not excluded as ineligible by virtue of one or more of the excluding criteria set forth in the definition of Eligible Accounts.

4.3 Eligible Inventory.

(a) As to each item of Inventory that is identified by a Borrower as Eligible Raw Materials Inventory in a borrowing base report submitted to Agent, such Inventory is not excluded as ineligible by virtue of one or more of the excluding criteria set forth in the definition of Eligible Raw Materials Inventory.

(b) As to each item of Inventory that is identified by a Borrower as Finished Goods Inventory in a borrowing base report submitted to Agent, such Inventory is (a) to such Borrower’s knowledge, of good and merchantable quality, free from known defects, and (b) not excluded as ineligible by virtue of one or more of the excluding criteria set forth in the definition of Eligible Finished Goods Inventory.

4.4 Equipment. Each material item of Equipment of Borrowers and their respective Restricted Subsidiaries is used or held for use in their business and, to such owner’s knowledge, is in good working order, ordinary wear and tear and damage by casualty excepted.

4.5 Location of Inventory and Equipment. The Inventory and Equipment (other than (i) vehicles, (ii) Equipment out for repair, (iii) Equipment and Inventory in transit between locations identified on Schedule 4.5(b), (iv) dies, tools, patterns, molds and similar items maintained with customers in the ordinary course of business, and (v) items of de minimus value) of Borrowers and their respective Restricted Subsidiaries are not stored with a bailee, warehouseman, or similar party (except as identified on Schedule 4.5(a), as such Schedule shall be required to be updated pursuant to the immediately succeeding sentence) and are located only at the locations identified on Schedule 4.5(b) (as such Schedule shall be required to be updated pursuant to the immediately succeeding sentence). Administrative Borrower shall be required to update Schedules 4.5(a) and Schedule 4.5(b) simultaneously with the delivery of quarterly financial statements required pursuant to Section 5.3; provided, that such Schedules shall be required to be updated only with respect to Equipment or Inventory having an aggregate value of $250,000 or greater.

4.6 Inventory Records. Each Borrower keeps correct and accurate records itemizing and describing the type, quality, and quantity of its and its Restricted Subsidiaries’ Inventory and the book value thereof.

4.7 State of Incorporation; Location of Chief Executive Office; Organizational Identification Number; Commercial Tort Claims.

(a) The jurisdiction of organization of Borrowers and each of their respective Restricted Subsidiaries is set forth on Schedule 4.7(a).

(b) The chief executive office of Borrowers and each of their respective Restricted Subsidiaries is located at the address indicated on Schedule 4.7(b) (as such Schedule may be updated pursuant to Section 5.9).

(c) Borrowers’ and each of their respective Restricted Subsidiaries’ organizational identification numbers, if any, are identified on Schedule 4.7(c).

(d) As of the Closing Date, Borrowers and their respective Restricted Subsidiaries do not hold any commercial tort claims, except as set forth on Schedule 4.7(d).

4.8 Due Organization and Qualification; Restricted Subsidiaries.

(a) Each Borrower is duly organized and existing and in good standing under the laws of the jurisdiction of their organization and qualified to do business in any state where the failure to be so qualified reasonably could be expected to result in a Material Adverse Change.

(b) Set forth on Schedule 4.8(b) is a complete and accurate description of the authorized capital Stock of each Borrower and their respective Restricted Subsidiaries, by class, and, as of the Closing Date, a description of the number of shares of each such class that are issued and outstanding. Other than as described on Schedule 4.8(b), as of the Closing Date, there are no subscriptions, options, warrants, or calls relating to any shares of each Borrower’s or any of their respective Restricted Subsidiaries’ capital Stock, including any right of conversion or exchange under any outstanding security or other instrument. None of Borrowers or any of their respective Restricted Subsidiaries is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital Stock or any security convertible into or exchangeable for any of its capital Stock.

(c) Set forth on Schedule 4.8(c) is a complete and accurate list of each Borrower’s direct and indirect Restricted Subsidiaries, showing, as of the Closing Date, the number and the percentage of the outstanding shares of each class of common and preferred Stock authorized for each of such Restricted Subsidiaries owned directly or indirectly by the applicable Borrower. All of the outstanding capital Stock of each such Restricted Subsidiary has been validly issued and is fully paid and non-assessable.

4.9 Due Authorization; No Conflict.

(a) The execution, delivery, and performance by each Borrower of this Agreement, the other Loan Documents and the Acquisition Documents to which each is a party have been duly authorized by all necessary action on the part of such Borrower.

(b) (i) The execution, delivery, and performance by each Borrower of this Agreement and the other Loan Documents to which it is a party do not (A) violate any material provision of federal, state, or local law or regulation applicable to any Borrower, the Governing Documents of any Borrower, or any material order, judgment, or decree of any court or other Governmental Authority binding on any Borrower, (B) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of any Borrower, (C) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of any Borrower, other than Permitted Liens, or (D) require any approval or consent of any Person under any material contractual obligation of any Borrower, other than consents or approvals that have been obtained and that are still in force and effect; and (ii) the execution, delivery, and performance by each Borrower of the Acquisition Documents to which it is a party do not (A) violate any provision of federal, state, or local law or regulation applicable to any Borrower, the Governing Documents of any Borrower, or any order, judgment, or decree of any court or other Governmental Authority binding on any Borrower, (B) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any contractual obligation of any Borrower, (C) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of any Borrower, other than Permitted Liens, or (D) require any approval or consent of any Person under any contractual obligation of any Borrower, other than consents or approvals that have been obtained and that are still in force and effect, which, in each of cases (A), (B), (C) and (D) of this clause (ii), could reasonably be expected to result in a Material Adverse Change.

(c) (i) Other than the filing of financing statements, and the recordation of the Mortgages, the execution, delivery, and performance by each Borrower of this Agreement and the other Loan

Documents to which it is a party do not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than consents or approvals that have been obtained and that are still in force and effect; and (ii) other than the filing of financing statements, and the recordation of the Mortgages, the execution, delivery, and performance by each Borrower of the Acquisition Documents to which it is a party do not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than consents or approvals that have been obtained and that are still in force and effect and other than those items which could not reasonably be expected to result in a Material Adverse Change.

(d) (i) This Agreement and the other Loan Documents to which each Borrower is a party, and all other documents contemplated hereby and thereby, when executed and delivered by such Borrower will be the legally valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally; and (ii) the Acquisition Documents to which each Borrower is a party, and all other documents contemplated hereby and thereby, when executed and delivered by such Borrower will be the legally valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally and except to the extent that the lack of such enforceability could not reasonably be expected to result in a Material Adverse Change.

(e) The Agent’s Liens in the Collateral are validly created, perfected, and first priority Liens to the extent provided for in the other Loan Documents, subject only to Permitted Liens.

(f) (i) The execution, delivery, and performance by each Guarantor of the Loan Documents to which it is a party have been duly authorized by all necessary action on the part of such Guarantor; and (ii) the execution, delivery, and performance by each Guarantor of the Acquisition Documents to which it is a party have been duly authorized by all necessary action on the part of such Guarantor except to the extent that the lack of such authorization could not reasonably be expected to result in a Material Adverse Change.

(g) The execution, delivery, and performance by each Guarantor of the Loan Documents to which it is a party do not (i) violate any material provision of federal, state, or local law or regulation applicable to such Guarantor, the Governing Documents of such Guarantor, or any material order, judgment, or decree of any court or other Governmental Authority binding on such Guarantor, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of such Guarantor, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of such Guarantor, other than Permitted Liens, or (iv) require any approval or consent of any Person under any material contractual obligation of such Guarantor, other than consents or approvals that have been obtained and that are still in force and effect.

(h) Other than the filing of financing statements and the recordation of the Mortgages, the execution, delivery, and performance by each Guarantor of the Loan Documents to which such Guarantor is a party do not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than consents or approvals that have been obtained and that are still in force and effect.

(i) (i) The Loan Documents to which each Guarantor is a party, and all other documents contemplated hereby and thereby, when executed and delivered by such Guarantor will be the legally valid and binding obligations of such Guarantor, enforceable against such Guarantor in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally; and (ii) the

Acquisition Documents to which each Guarantor is a party, and all other documents contemplated hereby and thereby, when executed and delivered by such Guarantor will be the legally valid and binding obligations of such Guarantor, enforceable against such Guarantor in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally and except to the extent that the lack of such enforceability could not reasonably be expected to result in a Material Adverse Change.

4.10 Litigation. Other than those matters disclosed on Schedule 4.10, there are no actions, suits, or proceedings pending or, to the knowledge of each Borrower, threatened against any Borrower or any of its Restricted Subsidiaries that (a) if adversely determined, could result in a Material Adverse Change or (b) relate to this Agreement or any other Loan Documents or any transaction contemplated hereby or thereby.

4.11 No Material Adverse Change. All financial statements relating to Borrowers and their respective Restricted Subsidiaries that have been delivered by Borrowers to the Lender Group have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments) and present fairly in all material respects, Borrowers’ and their respective Restricted Subsidiaries’ financial condition as of the date thereof and results of operations for the period then ended. There has not been a Material Adverse Change with respect to Borrowers and their respective Restricted Subsidiaries since October 1, 2004.

4.12 Fraudulent Transfer.

(a) Each Borrower and each of their respective Restricted Subsidiaries, taken as a whole, is Solvent.

(b) No transfer of property is being made by any Borrower or any of its Restricted Subsidiaries and no obligation is being incurred by any Borrower or any of its Restricted Subsidiaries in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of Borrowers or any of their respective Restricted Subsidiaries.

4.13 Employee Compliance.

(a) Set forth on Schedule 4.13(a) is a complete and accurate list of all Plans that meet the definition of an “employee pension benefit plan” under Section 3(2) of ERISA and that are currently maintained or contributed to by any Borrower, any of their respective Restricted Subsidiaries or any of their respective ERISA Affiliates as of the Closing Date.

(b) each Borrower, their respective Restricted Subsidiaries, and their respective ERISA Affiliates are in compliance in all material respects with all applicable provisions and requirements of ERISA and the regulations and published interpretations thereunder with respect to each Plan, and have performed all their obligations in all material respects under each Plan.

(d) All liabilities under each Plan are (i) funded to at least the minimum level required by law or, if higher, to the level required by the terms governing the Plans, (ii) insured with a reputable insurance company, (iii) provided for or recognized in the financial statements most recently delivered to Agent pursuant to Section 5.3 hereof to the extent required by GAAP or (iv) estimated in the formal notes to the financial statements most recently delivered to Agent pursuant to Section 5.3 hereof to the extent required by GAAP.

(e) To the best knowledge of each Borrower, there are no circumstances which may give rise to a material liability in relation to any Plan which is not funded, insured, provided for, recognized or estimated in the manner described in subsection (d) above.

4.14 Environmental Condition. Except as set forth on Schedule 4.14 or disclosed in the Phase I Environmental Site Assessment prepared by URS, and except for matters that would not reasonably be expected to result in the Borrowers or any of their respective Restricted Subsidiaries incurring material liability, (a) to Borrowers’ knowledge, none of Borrowers’ or their respective Restricted Subsidiaries’ properties or assets has ever been used by Borrowers, any of their respective Restricted Subsidiaries, or by previous owners or operators in the disposal of, or to produce, store, handle, treat, release, or transport, any Hazardous Materials, where such use, production, storage, handling, treatment, release or transport was in violation, in any material respect, of any applicable Environmental Law, (b) to Borrowers’ knowledge, none of Borrowers’ nor any of their respective Restricted Subsidiaries’ properties is or has ever been designated or identified pursuant to any environmental protection statute as a site requiring investigation or remediation due to the disposal or release of Hazardous Materials, (c) none of Borrowers nor any of their respective Restricted Subsidiaries have received notice that a Lien arising under any Environmental Law has attached to any revenues of any Borrower or any of its Restricted Subsidiaries or to any Real Property owned or operated by Borrowers or any of their respective Restricted Subsidiaries, and (d) none of Borrowers nor any of their respective Restricted Subsidiaries have received a summons, citation, notice, or directive from the United States Environmental Protection Agency or any other federal or state governmental agency (“Environmental Claim”) concerning any action or omission by any Borrower or any of its Restricted Subsidiaries resulting in the releasing or disposing of Hazardous Materials into the environment other than Environmental Claims that would not reasonably be expected to result in a Material Adverse Change, and there are no material Environmental Claims currently pending against Borrowers or any of their respective Restricted Subsidiaries.

4.15 Intellectual Property. Except for the matters which could not reasonably be expected to result in a Material Adverse Change, each Borrower and each of their respective Restricted Subsidiaries owns, or holds licenses in, all trademarks, trade names, copyrights, patents, patent rights, and licenses that are necessary to the conduct of its business as currently conducted.

4.16 Leases. Except for the matters which could not reasonably be expected to result in a Material Adverse Change, Borrowers and their respective Restricted Subsidiaries enjoy peaceful and undisturbed possession under all leases material to their business and to which they are parties or under which they are operating and all of such material leases are valid and subsisting and no material default by Borrowers or their respective Restricted Subsidiaries exists under any of them except for payments which are the subject of a Permitted Protest.

4.17 Deposit Accounts and Securities Accounts. As of the Closing Date, set forth on Schedule 4.17 is a listing of all of Borrowers’ and their respective Restricted Subsidiaries’ Deposit Accounts and Securities Accounts, including, with respect to each bank or securities intermediary (a) the name and address of such Person, and (b) the account numbers of the Deposit Accounts or Securities Accounts maintained with such Person.

4.18 Complete Disclosure. All factual information furnished by or on behalf of Borrowers or their respective Restricted Subsidiaries with respect to Borrowers or such Restricted Subsidiaries in writing to Agent or any Lender for purposes of or in connection with this Agreement and the other Loan Documents is, when taken as a whole with all other furnished information, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information (when taken as a whole with all other furnished information) not misleading in any material respect at such time in light of the circumstances under which such information was provided. On the Closing Date, the Projections received by Agent pursuant to clause (t) of Schedule 3.1 represent, and as of the date on which any other Projections are delivered to Agent, such additional Projections represent Borrowers’ good faith estimate of their and their respective Restricted Subsidiaries’ future

performance for the periods covered thereby (it being understood that the Projections are subject to significant uncertainties and contingencies, many of which are beyond control and that no assurance is or can be given that the Projections will be realized and that actual results may vary from such Projections and such variances may be material).

4.19 Indebtedness. Set forth on Schedule 4.19 is a true and complete list of all Indebtedness of each Borrower and each of their respective Restricted Subsidiaries outstanding immediately prior to the Closing Date that is to remain outstanding after the Closing Date and such Schedule accurately reflects the aggregate principal amount of such Indebtedness and describes the principal terms thereof.

4.20 Material Contracts. Except for matters which, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change, each Material Contract (a) is in full force and effect and is binding upon and enforceable against each Person that is a party thereto in accordance with its terms, (b) has not been otherwise amended or modified (except as not otherwise prohibited hereby), and (c) is not in default due to the action of any Borrower or any of its Restricted Subsidiaries.

5. AFFIRMATIVE COVENANTS.

Each Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations, Borrowers shall and shall cause each of their respective Restricted Subsidiaries to do all of the following:

5.1 Accounting System. Maintain a system of accounting that enables Borrowers to produce financial statements in accordance with GAAP and maintain records pertaining to the Collateral that contain information as from time to time reasonably may be requested by Agent. Borrowers also shall keep a reporting system that shows all additions, sales, claims, returns, and allowances with respect to their and their respective Restricted Subsidiaries’ sales.

5.2 Collateral Reporting. Provide Agent with each of the reports set forth on Schedule 5.2 at the times specified therein. In addition, each Borrower agrees to cooperate fully with Agent to facilitate and implement, where appropriate, a system of electronic collateral reporting in order to provide electronic reporting of each of the items set forth above.

5.3 Financial Statements, Reports, Certificates. Deliver to Agent each of the financial statements, reports, or other items set forth on Schedule 5.3 at the time specified herein. In addition, Parent agrees that no Restricted Subsidiary of Parent will have a fiscal year different from that of Parent.

5.4 Intentionally Omitted.

5.5 Inspection. Subject to any specific limitations set forth in any other Loan Document, permit Agent and each of its duly authorized representatives or agents to visit any of its properties and inspect any of its assets or books and records, to examine and make copies of its books and records, and to discuss its affairs, finances, and accounts with, and to be advised as to the same by, its officers and employees at such reasonable times and intervals as Agent may designate and, so long as no Default or Event of Default exists, with reasonable prior notice to Administrative Borrower.

5.6 Maintenance of Properties. Maintain and preserve all of their properties which are necessary or useful in the proper conduct to their business in good working order and condition, ordinary wear, tear, and casualty excepted (and except where the failure to do so could not be expected to result in a Material Adverse Change), and comply at all times with the provisions of all material leases to which it is a party as lessee (except where the failure to do so could not reasonably be expected to result in a Material Adverse Change), so as to prevent any loss or forfeiture thereof or thereunder.

5.7 Taxes. Cause all material assessments and taxes, whether real, personal, or otherwise, due or payable by, or imposed, levied, or assessed against Borrowers, their respective Restricted Subsidiaries, or any of their respective assets to be paid in full, before delinquency or before the expiration of any extension period, except to the extent that the validity of such assessment or tax shall be the subject of a Permitted Protest. Borrowers will and will cause their respective Restricted Subsidiaries to make timely payment or deposit of all tax payments and withholding taxes required of them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Agent with proof reasonably satisfactory to Agent indicating that the applicable Borrower or applicable Restricted Subsidiary has made such payments or deposits (except to the extent the subject of a Permitted Protest).

5.8 Insurance.

(a) At Borrowers’ expense, maintain insurance respecting their and their respective Restricted Subsidiaries’ assets wherever located, covering loss or damage by fire, theft, explosion, and all other hazards and risks as ordinarily are insured against by other Persons engaged in the same or similar businesses and in the same geographic area. Borrowers also shall maintain business interruption, public liability, and product liability insurance, as well as insurance against larceny, embezzlement, and criminal misappropriation. All such policies of insurance shall be in such amounts and with such insurance companies as are reasonably satisfactory to Agent. Borrowers shall deliver copies of all such policies to Agent with an endorsement naming Agent as the sole loss payee (under a reasonably satisfactory lender’s loss payable endorsement) or additional insured, as appropriate. Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than 30 days prior written notice to Agent in the event of cancellation of the policy for any reason whatsoever.

(b) Administrative Borrower shall give Agent prompt notice of any loss exceeding $500,000 covered by such insurance. So long as no Event of Default has occurred and is continuing, Borrowers shall have the exclusive right to adjust any losses payable under any such insurance policies which are less than $500,000. Following the occurrence and during the continuation of an Event of Default, or in the case of any losses payable under such insurance exceeding $500,000, Agent shall have the exclusive right to adjust any losses payable under any such insurance policies, without any liability to Borrowers whatsoever in respect of such adjustments. Any monies received as payment for any loss under any insurance policy mentioned above (other than liability insurance policies) or as payment of any award or compensation for condemnation or taking by eminent domain, shall be paid over to Agent to be applied at the option of the Required Lenders either to the prepayment of the Obligations or to be disbursed to Administrative Borrower under staged payment terms reasonably satisfactory to the Required Lenders for application to the cost of repairs, replacements, or restorations; provided, however, that, with respect to any such monies in an aggregate amount during any 12 consecutive month period not in excess of $500,000, so long as (A) no Default or Event of Default shall have occurred and is continuing, (B) Borrowers’ Excess Availability is greater than $10,000,000, (C) Administrative Borrower shall have given Agent prior written notice of the intention of Borrowers or their respective Restricted Subsidiaries to apply such monies to the costs of repairs, replacement, or restoration of the property which is the subject of the loss, destruction, or taking by condemnation, (D) the monies are held in a cash collateral account in which Agent has a perfected first-priority security interest, and (E) Borrowers or their respective Restricted Subsidiaries complete such repairs, replacements, or restoration within 360 days after the initial receipt of such monies, Borrowers shall have the option to apply such monies to the costs of repairs, replacement, or restoration of the property which is the subject of the loss, destruction, or taking by condemnation unless and to the extent that such applicable period shall have expired without such repairs, replacements, or restoration being made, in which case, any amounts remaining in the cash collateral account shall be paid to Agent and applied as set forth above.

(c) Borrowers will not, and will not suffer or permit their respective Restricted Subsidiaries to, take out separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 5.8, unless Agent is included thereon as an additional insured or

loss payee under a lender’s loss payable endorsement. Administrative Borrower promptly shall notify Agent whenever such separate insurance is taken out, specifying the insurer thereunder and full particulars as to the policies evidencing the same, and copies of such policies promptly shall be provided to Agent.

5.9 Location of Inventory and Equipment. Keep Borrowers’ and their respective Restricted Subsidiaries’ Inventory and Equipment (other than (i) vehicles, (ii) Equipment out for repair, (iii) Equipment and Inventory in transit between locations identified on Schedule 4.5(b), (iv) items stored with a bailee, warehouseman, or similar party to the extent disclosed on Schedule 4.5(a), (v) dies, tools, patterns, molds and similar items maintained with customers in the ordinary course of business, and (vi) items of de minimus value) only at the locations identified on Schedule 4.5(b) and their chief executive offices only at the locations identified on Schedule 4.7(b); provided, however, that Administrative Borrower may amend Schedule 4.5(b) or Schedule 4.7(b) so long as (A) with respect to Schedule 4.5(b), such amendment occurs by written notice to Agent in accordance with the last sentence of Section 4.5, and with respect to Schedule 4.7(b), such amendment occurs by written notice to Agent not less than 30 days prior to the date on which such chief executive office is relocated, (B) such new location is within the continental United States, and (C) at the time of such written notification, the applicable Borrower or Restricted Subsidiary (x) with respect to any location at which books and records (other than prior years’ historical records) are maintained or Inventory and/or Equipment having an aggregate value of $2,000,000 or greater is maintained, obtains a Collateral Access Agreement with respect thereto and (y) with respect to any other location, uses its commercially reasonable efforts to provide Agent a Collateral Access Agreement with respect thereto.

5.10 Compliance with Laws. Comply with the requirements of all applicable laws, rules, regulations, and orders of any Governmental Authority, other than laws, rules, regulations, and orders the non-compliance with which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change.

5.11 Leases. Except for matters which could not reasonably be expected to result in a Material Adverse Change, pay when due all rents and other amounts payable under any material leases to which any Borrower or any of its Restricted Subsidiaries is a party or by which any Borrower’s or any of their respective Restricted Subsidiaries’ properties and assets are bound, unless such payments are the subject of a Permitted Protest.

5.12 Existence. Except as permitted by Section 6.3 and Section 6.4, at all times preserve and keep in full force and effect each Borrower’s and each of their respective Restricted Subsidiaries’ valid existence and, except to the extent failure to do so could not reasonably be expected to result in a Material Adverse Change, good standing and any rights, franchises, permits, licenses, authorizations, approvals, entitlements and accreditations material to their businesses.

5.13 Environmental.

(a) Keep any property either owned or operated by any Borrower or any of its Restricted Subsidiaries free of any Environmental Liens or post bonds or other financial assurances sufficient to satisfy the obligations or liability evidenced by such Environmental Liens, (b) comply, in all material respects, with Environmental Laws and provide to Agent reasonable documentation of such compliance which Agent reasonably requests, provided that, so long as no Default or Event of Default shall have occurred and be continuing, Agent shall not make such a request more than once per any consecutive 12-month period, (c) promptly notify Agent of any release of a Hazardous Material in any reportable quantity from or onto property owned or operated by any Borrower or any of its Restricted Subsidiaries and take any Remedial Actions required to abate said release or otherwise to come into material compliance with applicable Environmental Law, and (d) promptly, but in any event within 10 Business Days of its receipt thereof, provide Agent with written notice of any of the following: (i) notice that an Environmental Lien has been filed against any of the real or personal property of any Borrower or any of its Restricted Subsidiaries, (ii) commencement of any Environmental Action or notice that an Environmental Action will be filed against any Borrower or any of its

Restricted Subsidiaries which Environmental Action could reasonably be expected to result in any Borrower or any of its Restricted Subsidiaries incurring material liability under Environmental Laws, and (iii) notice of a violation, citation, or other administrative order which reasonably could be expected to result in a Material Adverse Change.

5.14 Intentionally Omitted.

5.15 Control Agreements. Subject to Section 3.6(b), take all reasonable steps in order for Agent to obtain control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the Code with respect to (subject to the proviso contained in Section 6.12) all of its Securities Accounts, Deposit Accounts, electronic chattel paper, investment property, and letter of credit rights.

5.16 Formation of Subsidiaries. At the time that any Borrower or any Guarantor forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Closing Date and such Subsidiary is a Restricted Subsidiary, such Borrower or such Guarantor shall (a) cause such new Restricted Subsidiary to provide to Agent a joinder to this Agreement or the Guaranty, as applicable (it being understood and agreed that Agent shall determine, in its Permitted Discretion, whether such new Restricted Subsidiary would become a Borrower or a Guarantor, based primarily on whether such new Restricted Subsidiary would be an operating company that would generate Borrowing Base), and the Security Agreement, together with such other security documents (including Mortgages with respect to any Real Property of such new Restricted Subsidiary, subject to Section 5.17), as well as appropriate financing statements (and with respect to all property subject to a Mortgage, fixture filings), all in form and substance reasonably satisfactory to Agent (including being sufficient to grant Agent a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Restricted Subsidiary), (b) provide to Agent a pledge agreement and appropriate certificates and powers or financing statements, hypothecating all of the direct or beneficial ownership interest in such new Restricted Subsidiary, in form and substance reasonably satisfactory to Agent, and (c) provide to Agent all other documentation, including one or more opinions of counsel reasonably satisfactory to Agent, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above (including policies of title insurance or other documentation with respect to all property subject to a Mortgage). Notwithstanding the foregoing, if a Subsidiary that is so formed or acquired is a Controlled Foreign Corporation, then clause (a) of the immediately preceding sentence shall not be applicable and, with respect to clause (b) of the immediately preceding sentence, such pledge shall be limited to 65% of the voting power of all classes of capital Stock of such Subsidiary entitled to vote. Any document, agreement, or instrument executed or issued pursuant to this Section 5.16 shall be a Loan Document. Notwithstanding the foregoing, Agent and Lenders shall not be obligated to consent to any such formation or acquisition of a Subsidiary unless such formation or acquisition is otherwise expressly permitted hereunder.

5.17 Real Property. Upon the acquisition of any fee interest in Real Property with a purchase price or Fair Market Value in excess of $500,000 (other than Real Property located in the State of New York or in any other state having substantially similar real estate mortgage taxes), promptly notify Agent of the acquisition of such Real Property and within 60 days (or such longer time as Agent, in its reasonable discretion, may agree) thereafter: (a) grant Agent a first priority Mortgage on such Real Property; (b) deliver mortgagee title insurance policies (or marked commitments to issue the same) for such Real Property issued by a title insurance company reasonably satisfactory to Agent in an amount reasonably satisfactory to Agent assuring Agent that the Mortgage on such Real Property Collateral is a valid and enforceable first priority mortgage Lien on such Real Property Collateral free and clear of all defects and encumbrances except Permitted Liens, and such mortgagee title insurance policies (or marked commitments to issue the same) otherwise shall be in form and substance reasonably satisfactory to Agent; (c) Borrowers and their Subsidiaries shall pay to said title insurance company all expenses and premiums of said title insurance company in connection with the issuance of such mortgagee title insurance policies (or marked commitments to issue the same) and in addition shall, to the extent required, pay all recording costs, stamp taxes, mortgage taxes, intangibles taxes and other fees and costs (including reasonable attorneys fees and expenses) incurred in

connection therewith; and (d) execute and/or deliver to Agent such other documentation and opinions of counsel, in form and substance reasonably satisfactory to Agent, in connection with the grant of such Mortgage as Agent shall request in its Permitted Discretion, including, without limitation, surveys (or existing surveys and survey affidavits that are (x) sufficient to have the “matters that would be shown on a survey” exception deleted from the mortgagee policy of title insurance and (y) reasonably satisfactory to Agent), financing statements and fixture filings.

5.18 ERISA Compliance

(a) Each Borrower shall do, and shall cause each of their respective Restricted Subsidiaries and ERISA Affiliates to do, each of the following: (i) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the IRC and each other applicable federal or state law; (ii) cause each Qualified Plan to maintain its qualified status under Section 401(a) of the IRC; (iii) make all required contributions to each Plan; (iv) ensure that all liabilities under each Plan are (A) funded to at least the minimum level required by law or, if higher, to the level required by the terms governing such Plan; (B) insured with a reputable insurance company; or (C) provided for or recognized in the financial statements most recently delivered to Agent under Section 5.3 (to the extent required by GAAP); and (v) ensure that the contributions or premium payments to or in respect of each Plan are and continue to be promptly paid at no less than the rates required under the rules of such Plan and in accordance with the most recent actuarial advice received in relation to such Plan and applicable law.

(b) Deliver to Agent such certifications or other evidence of compliance with the provisions of Section 4.13 as Agent may from time to time reasonably request.

(c) Promptly notify Agent of each of the following ERISA events affecting any Borrower, any of their respective Restricted Subsidiaries or any ERISA Affiliates (but in no event more than ten (10) days after such event), together with a copy of each notice with respect to such event that may be required to be filed with a Governmental Authority and each notice delivered by a Governmental Authority to any Borrower, any of their respective Restricted Subsidiaries or any ERISA Affiliates with respect to such event:

(i) an ERISA Event;

(ii) the adoption of any new Pension Plan by any Borrower, any of their respective Restricted Subsidiaries or any ERISA Affiliates; or

(iii) except as required under the terms of any collective bargaining agreement, the adoption of any amendment to a Pension Plan, if such amendment will result in a material increase in benefits or unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA).

(d) Promptly deliver to Agent, upon request, copies of (i) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by any Borrower, any of their respective Restricted Subsidiaries or any ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan; (ii) all notices received by any Borrower, any of their respective Restricted Subsidiaries or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (iii) such other documents or governmental reports or filings relating to any Plan as Agent shall reasonably request.

6. NEGATIVE COVENANTS.

Borrowers covenant and agree that, until termination of all of the Commitments and payment in full of the Obligations, Borrowers will not and will not permit any of their respective Restricted Subsidiaries to do any of the following:

6.1 Indebtedness. Create, incur, assume, suffer to exist, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except:

(a) Indebtedness evidenced by this Agreement and the other Loan Documents, together with Indebtedness owed to Underlying Issuers with respect to Underlying Letters of Credit,

(b) Indebtedness set forth on Schedule 4.19,

(d) refinancings, renewals, or extensions of Indebtedness permitted under clauses (b) and (c) of this Section 6.1 (and continuance or renewal of any Permitted Liens associated therewith) so long as: (i) such refinancings, renewals, or extensions do not result in an increase in the principal amount of the Indebtedness so refinanced, renewed, or extended, (ii) such refinancings, renewals, or extensions do not result in a shortening of the average weighted maturity of the Indebtedness so refinanced, renewed, or extended, nor are they on terms or conditions, that, taken as a whole, are materially more burdensome or restrictive to the applicable Borrower, (iii) if the Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment to the Obligations, then the terms and conditions of the refinancing, renewal, or extension Indebtedness must include subordination terms and conditions that are at least as favorable to the Lender Group, taken as a whole, as those that were applicable to the refinanced, renewed, or extended Indebtedness, and (iv) the Indebtedness that is refinanced, renewed, or extended is not recourse to any Person that is liable on account of the Obligations other than those Persons which were obligated with respect to the Indebtedness that was refinanced, renewed, or extended or as otherwise permitted pursuant to Section 6.1,

(e) endorsement of instruments or other payment items for deposit,

(f) Indebtedness consisting of Permitted Investments,

(g) Indebtedness represented by any notes issued pursuant to the Indenture, including any Senior Notes (or any other evidence of indebtedness for borrowed money under the Senior Notes or the Indenture) in an aggregate principal amount not to exceed $165,000,000 (provided, however, that such Indebtedness may exceed $165,000,000 up to $250,000,000 so long as with respect to the incurrence of any such Indebtedness in excess of $165,000,000, both immediately before and immediately after giving effect to any such incurrence, (i) no Default or Event of Default shall have occurred and be continuing and (ii) the Borrowers and the Restricted Subsidiaries shall be in pro forma compliance with the covenants set forth in Section 6.16) at any one time outstanding and any Refinancing Indebtedness in respect thereof (whether in whole or in part), ,

(h) Hedge Agreements entered into in the ordinary course of business and not for speculative purposes;

(i) Indebtedness of a Loan Party to another Loan Party and any Refinancing Indebtedness in respect thereof (whether in whole or in part) so long as such Indebtedness is subject to the Intercompany Subordination Agreement;

(j) Guarantees by a Loan Party of Indebtedness incurred by another Loan Party so long as the incurrence of such Indebtedness is otherwise permitted by the terms hereof;

(k) Permitted Subordinated Indebtedness in an aggregate principal amount not to exceed $75,000,000 and any Refinancing Indebtedness in respect thereof so long as with respect to the incurrence of any such Permitted Subordinated Indebtedness, both immediately before and immediately after giving effect to any such incurrence, the Borrowers and the Restricted Subsidiaries shall be in pro forma compliance with the covenants set forth in Section 6.16;

(l) Indebtedness (other than for borrowed money) solely to the extent subject to Permitted Liens;

(m) (i) Permitted Acquired Indebtedness and (ii) Indebtedness of any Borrower and the Restricted Subsidiaries owed to the seller of any property acquired in a Permitted Acquisition on an unsecured subordinated basis, which subordination shall be on terms reasonably satisfactory to Agent, in each case, so long as both immediately prior and after giving effect thereto, (x) no Event of Default shall exist or result therefrom, and (y) the Borrowers and the Restricted Subsidiaries will be in pro forma compliance with the covenants set forth in Section 6.16, after giving effect to such Permitted Acquisition and the incurrence or issuance of such Indebtedness;

(n) Indebtedness consisting of promissory notes issued by any Borrower or any Restricted Subsidiary to current or former directors, officers, employees and consultants, their respective estates, spouses or former spouses to finance the purchase or redemption of Stock permitted by Section 6.10;

(o) Indebtedness consisting of obligations of any Borrower or any Restricted Subsidiary under deferred compensation, adjustment of purchase price, earn outs, indemnification or other similar arrangements incurred by such Person in connection with the Acquisition Transactions, Permitted Acquisitions and Permitted Dispositions;

(p) cash management obligations and other Indebtedness in respect of netting services, overdraft protections and similar arrangements, in each case in connection with cash management and Deposit Accounts and incurred in the ordinary course of business; and

(q) additional Indebtedness of Borrowers and their Restricted Subsidiaries in an aggregate principal amount not to exceed $15,000,000 at any time outstanding solely to the extent that such Indebtedness consists of either (i) Purchase Money Indebtedness or (ii) Indebtedness that is subordinated to the Obligations on terms reasonably satisfactory to Agent.

6.2 Liens. Create, incur, assume, or suffer to exist, directly or indirectly, any Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens (including Liens that are replacements of Permitted Liens to the extent that the original Indebtedness is refinanced, renewed, or extended under Section 6.1 and so long as the replacement Liens only encumber those assets that secured the refinanced, renewed, or extended Indebtedness and proceeds thereof or additions or accessions thereto).

6.3 Restrictions on Fundamental Changes. Enter into any merger, consolidation, reorganization, or recapitalization, or liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution), except that:

(a) any Borrower or any Restricted Subsidiary may merge with (i) any Borrower (including a merger, the purpose of which is to reorganize such Borrower into a new jurisdiction), or (ii) any one or more other Restricted Subsidiaries; provided that a Borrower shall be the continuing or surviving Person or the continuing or surviving Person shall expressly assume the obligations of such Borrower in a manner reasonably acceptable to Agent;

(b) any Borrower or Restricted Subsidiary may liquidate or dissolve or change its legal form so long as its assets are transferred to (i) in the case of a Borrower, to another Borrower and (ii) in the case of a Restricted Subsidiary, to a Loan Party or any other Restricted Subsidiary;

(c) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, any Borrower or Restricted Subsidiary may merge with any other Person in order to effect an Investment permitted pursuant to Section 6.12; provided that the continuing or surviving Person shall be a

Restricted Subsidiary, which together with each of its Restricted Subsidiaries, shall have complied with the requirements of Section 5.16;

(d) the Borrowers and the Restricted Subsidiaries may consummate the Acquisition Transactions; and

(e) so long as no Event of Default exists or would result therefrom, a merger, consolidation, reorganization, recapitalization, liquidation, windup or dissolution, the sole purpose of which is to effect a Disposition permitted pursuant to Section 6.4.

6.4 Disposal of Assets. Other than Permitted Dispositions, convey, sell, lease, license, assign, transfer, or otherwise dispose of (collectively, a “Disposition”) any of the assets of any Borrower or any of its Restricted Subsidiaries.

6.5 Change Name. Change any Borrower’s or any of their respective Restricted Subsidiaries’ name, organizational identification number, jurisdiction of organization, or organizational identity; provided, however, that any Borrower or any of its Restricted Subsidiaries may change its name upon at least 10 days prior written notice by Parent or Administrative Borrower to Agent of such change so long as, (a) at the time of such written notification, such Borrower or such Restricted Subsidiary provides any financing statements necessary to perfect and continue perfected the Agent’s Liens and (b) immediately after such name change, Administrative Borrower provides Agent with evidence of such name change (including copies of any related public filings).

6.6 Nature of Business. Engage in any material line of business substantially different from those lines of business conducted by Borrowers and the Restricted Subsidiaries on the Closing Date other than any businesses reasonably related or ancillary thereto.

6.7 Prepayments and Amendments. Except in connection with a refinancing permitted by Section 6.1,

(a) optionally prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of any Borrower or any Restricted Subsidiary of a Borrower, except (i) Purchase Money Indebtedness, (ii) the Obligations in accordance with this Agreement; (iii) Borrowers may optionally redeem the Senior Notes to the extent permitted by the Indenture so long as (x) no Event of Default has occurred and is continuing or would result therefrom and (y) Borrowers’ Excess Availability exceeds $10,000,000 after giving effect to any such payment, and (iv) any other Indebtedness (other than Permitted Subordinated Indebtedness) so long as (x) no Event of Default has occurred and is continuing or would result therefrom and (y) Borrowers’ Excess Availability exceeds $10,000,000 after giving effect to any such payment;

(b) make any payment on account of Indebtedness that has been contractually subordinated in right of payment if such payment is not permitted at such time under the subordination terms and conditions, or

(c) directly or indirectly, amend, modify, alter, increase, or change any of the terms or conditions of any agreement, instrument, document, indenture, or other writing evidencing or concerning the Senior Notes or any Permitted Subordinated Indebtedness in a manner materially adverse to the interests of the Lender Group other than to consummate a Refinancing Indebtedness in respect thereof.

6.8 Intentionally Omitted.

6.9 Intentionally Omitted.

6.10 Distributions. Make any distribution or declare or pay any dividends (in cash or other property, other than common Stock) on, or purchase, acquire, redeem, or retire (a “Restricted Payment”) any of Parent’s Stock, of any class, whether now or hereafter outstanding, except as follows:

(a) to pay Holdings to enable it to pay general corporate overhead expenses of Holdings, including franchise taxes and other fees required to maintain the existence of Holdings, insurance premiums and indemnification claims made by directors or officers of Holdings attributable to the ownership or operation of any Loan Party;

(b) (i) so long as (x) no Default or Event of Default has occurred and is continuing or would result therefrom and (y) immediately after giving effect thereto, Borrowers shall have Excess Availability of not less than $10,000,000, to pay reasonable fees paid to non-independent members of Holdings’ Board of Directors, (ii) to pay reasonable expenses incurred by non-independent members of Holdings’ Board of Directors, and (iii) to pay reasonable fees paid to and expenses incurred by independent members of Holdings’ Board of Directors, collectively for clauses (i), (ii) and (iii), in an aggregate amount not to exceed $500,000 in any fiscal year;

(c) so long as (i) no Default or Event of Default has occurred and is continuing or would result therefrom and (ii) immediately after giving effect thereto, Borrowers shall have Excess Availability of not less than $3,000,000, to permit Holdings to purchase, repurchase, redeem or otherwise acquire shares of capital Stock of any Loan Party from employees, former employees, directors or former directors of such Loan Party (or permitted transferees of such employees, former employees, directors or former directors), pursuant to the terms of agreements (including employment agreements) or plans (or amendments thereto) approved by such Loan Party’s Board of Directors under which such Persons purchase or sell, or are granted the option to purchase or sell, shares of such Stock; provided, that the aggregate amount of such repurchases and other acquisitions in any calendar year shall not exceed $500,000;

(d) so long as (i) no Default or Event of Default has occurred and is continuing or would result therefrom and (ii) immediately after giving effect thereto, Borrowers shall have Excess Availability of not less than $1,000,000, to permit Holdings to pay management fees pursuant to the terms of the Management Agreement; provided, that the aggregate amount of such management fees in any calendar year shall not exceed $1,000,000; provided, further, that in the event the payment of such management fees is restricted based on Excess Availability, such management fees shall continue to accrue, and all accrued but unpaid amounts shall be payable following the increase in Excess Availability above such limitation (after giving effect to any payment of such accrued but unpaid amounts);

(e) Restricted Payments made on the Closing Date to consummate the Acquisition Transactions;

(f) to the extent constituting Restricted Payments, the Borrowers and the Restricted Subsidiaries may enter into transactions expressly permitted by Section 6.4 or Section 6.12;

(g) cashless repurchases of Stock deemed to occur upon exercise of stock options or warrants if such Stock represents a portion of the exercise price of such options or warrants;

(h) to Holdings (or any direct or indirect parent of Holdings) to be used solely to pay federal, state and local income taxes made no earlier than five days prior to the date on which such Person is required to make such payment in an amount not to exceed the aggregate tax liability attributable to Borrowers and their respective Subsidiaries for such calendar year determined as if Borrowers and their respective Subsidiaries were a separate affiliated group (as defined in Section 1504 of the IRC, as amended) filing a consolidated return, or, to the extent applicable, a separate group filing combined or unitary returns, and then only to the extent that any such payments are actually paid by Holdings to governmental entities; and

(i) so long as (i) no Default or Event of Default has occurred and is continuing or would result therefrom and (ii) immediately after giving effect thereto, Borrowers shall have Excess Availability of not less than $10,000,000, other Restricted Payments not to exceed $10,000,000 in the aggregate since the Closing Date; provided that such amount may be increased by an amount equal to amounts available for Restricted Payments pursuant to Section 4.09(iii) of the Indenture.

6.11 Fiscal Year. Modify or change its fiscal year.

6.12 Investments. Except for Permitted Investments, directly or indirectly, make or acquire any Investment, or incur any liabilities (including contingent obligations) for or in connection with any Investment; provided, however, that Borrowers and their respective Restricted Subsidiaries shall not have Permitted Investments (other than in the Cash Management Accounts) in Deposit Accounts or Securities Accounts in an aggregate amount in excess of $50,000 (exclusive of Trust Funds) at any one time unless the applicable Borrower or the applicable Restricted Subsidiary, and the applicable securities intermediary or bank have entered into Control Agreements governing such Permitted Investments in order to perfect (and further establish) the Agent’s Liens in such Permitted Investments. Subject to the foregoing proviso, Borrowers shall not and shall not permit their respective Restricted Subsidiaries to establish or maintain any Deposit Account or Securities Account unless Agent shall have received a Control Agreement in respect of such Deposit Account or Securities Account.

6.13 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any transaction with any Affiliate of any Borrower except for transactions that (a) are in the ordinary course of Borrowers’ business, (b) are upon fair and reasonable terms and (c) are no less favorable to Borrowers or their respective Restricted Subsidiaries, as applicable, than would be obtained in an arm’s length transaction with a non-Affiliate; provided, however, that if any such transaction involves aggregate payments or other property with a Fair Market Value in excess of $2,500,000, it shall be approved by a majority of the members of the Board of Directors of Parent (including a majority of the disinterested members thereof), such approval to be evidenced by board resolutions stating that the Parent’s Board of Directors has determined that such transactions comply with the foregoing provisions, and if any such transaction involves an aggregate Fair Market Value of more than $5,000,000, Parent will, prior to the consummation thereof, obtain a favorable opinion as to the fairness of the financial terms of such transactions or series of related transactions to the applicable Loan Party, from an Independent Financial Advisor and file the same with Agent; provided, further, however, that such restrictions shall not apply to:

(a) transactions exclusively between or among Holdings and its Subsidiaries permitted hereby;

(b) reasonable fees and compensation paid to, and indemnity provided for directors, officers, employees and consultants to Holdings and its Subsidiaries (provided, that to the extent otherwise covered by clauses (b) or (d) of Section 6.10, then such clauses of Section 6.10 shall also apply);

(c) any Permitted Acquisition from a non-Affiliate that is an arm’s length transaction and fails to comply with this Section solely because such a non-Affiliate becomes an Affiliate as a result of such Permitted Acquisition;

(d) transactions otherwise permitted by this Agreement;

(e) any Investment permitted pursuant to Section 6.12;

(f) any sale of the Stock of any Loan Party in exchange for equity contributions from Parent;

(g) any merger or other transaction with an Affiliate solely for the purpose of reincorporating a Loan Party in another jurisdiction or creating a holding company, to the extent otherwise permitted by this Agreement;

(h) any employment, stock option, stock repurchase, employee benefit compensation, business expense reimbursement, severance, termination or other employment-related agreements, arrangements or plans entered into in good faith by a Loan Party in the ordinary course of business;

(i) sales or purchases of inventory, other products or services to or from any Affiliate of the Borrowers entered into in the ordinary course of business on terms no less favorable to the Borrowers and its Subsidiaries than those that could be obtained at the time of such sale or purchase in arm’s-length dealings with a Person who is not an Affiliate;

(j) any agreement in effect as of the Closing Date or any transaction contemplated thereby and any amendment thereto so long as any such amendment or replacement agreement is not more disadvantageous to Borrowers or the Restricted Subsidiaries in any material respect than the original agreement as in effect on the Closing Date; and

(k) the Management Agreement.

6.14 Use of Proceeds. Use the proceeds of the Advances for any purpose other than (a) on the Closing Date, to pay transactional fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents, and the transactions contemplated hereby and thereby and to backstop or replace Letters of Credit, and (b) thereafter, consistent with the terms and conditions hereof, to finance ongoing working capital, capital expenditure, and general corporate needs of Borrowers, including Permitted Acquisitions, and for its lawful and permitted purposes.

6.15 Intentionally Omitted.

6.16 Financial Covenants.

(a) Fixed Charge Coverage Ratio. Fail to maintain or achieve a Fixed Charge Coverage Ratio, measured on a fiscal quarter-end basis, of at least the required amount set forth in the following table for the “Applicable Period” set forth opposite thereto; provided, however, that, with respect to any “Applicable Period”, if daily average Excess Availability was at least $12,500,000 during the 30 day period immediately preceding the applicable date of determination and on the applicable date of determination, then the foregoing covenant shall not apply for such applicable period:

Applicable Ratio		Applicable Period
1.05:1.0		For the 4 quarter period ending March 31, 2005
1.10:1.0		For the 4 quarter period ending June 30, 2005
1.10:1.0		For the 4 quarter period ending September 30, 2005
1.10:1.0		For the 4 quarter period ending December 31, 2005
1.20:1.0		For the 4 quarter period ending each fiscal quarter thereafter

(b) Capital Expenditures. Make Capital Expenditures in any fiscal year in excess of the amount set forth in the following table for the applicable period:

Applicable Amount		Applicable Period
$	7,900,000	fiscal year 2005
$	8,200,000	fiscal year 2006
$	8,300,000	fiscal year 2007
$	8,500,000	fiscal year 2008
$	8,800,000	fiscal year 2009 and each fiscal year thereafter

provided, however, that up to 75% of the difference between the amount of Capital Expenditure that may be made in any fiscal year and the amount of Capital Expenditures actually made in such fiscal year, may be made in the immediately succeeding fiscal year; provided further, however, that with respect to any Permitted Acquisitions, the “Applicable Amount” for the “Applicable Period” in which such Permitted Acquisition is consummated shall be increased by an amount equal to the product of (a) 1.25 times (b) the average amount per year of Capital Expenditures made by such acquired Person during the immediately preceding three (3) year period.

6.17 Acquisition Documents. Amend, modify or waive in any way materially adverse to the Lender Group, any term or provision of the Acquisition Documents.

6.18 Indenture Documents. Amend, modify or waive in any way materially adverse to the Lender Group, any term or provision of the Indenture Documents.

6.19 Governing Documents Amend, modify or waive in any way materially adverse to the Lender Group, any term or provision of any Governing Document of any Borrower or Guarantor.

6.20 Real Property Collateral. Without in any manner limiting Section 6.2, execute and deliver a mortgage with respect to any Real Property located in the State of New York or any other Real Property for which Borrowers and their Restricted Subsidiaries are not required to grant a Mortgage pursuant to Section 5.17, except (a) in favor of Agent or (b) if the Agent has been, or will simultaneously be, granted a first priority mortgage with respect thereto, in favor of the Trustee as a second priority mortgage to the extent permitted by the Intercreditor Agreement.

7. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default (each, an “Event of Default”) under this Agreement:

7.1 If Borrowers fail to pay when due and payable, or when declared due and payable, (a) all or any portion of the Obligations consisting of interest, fees, or charges due the Lender Group, reimbursement of Lender Group Expenses, or other amounts (other than any portion thereof constituting principal) constituting Obligations (including any portion thereof that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), and such failure continues for a period of 3 Business Days, or (b) all or any portion of the principal of the Obligations);

7.2 If any Borrower or any of its Restricted Subsidiaries

(a) fails to perform or observe any covenant or other agreement contained in any of Sections 5.5, 5.8, 5.12 (as to existence), and 6.1 through 6.20 of this Agreement or Section 6 of the Security Agreement;

(b) fails to perform or observe any covenant or other agreement contained in any of Sections 2.7, 5.2, and 5.3 of this Agreement and such failure continues for a period of 3 Business Days after written notice thereof is given to Administrative Borrower by Agent;

(c) fails to perform or observe any covenant or other agreement contained in any of Sections 5.6, 5.7, 5.9, 5.15, 5.16, and 5.17 of this Agreement and such failure continues for a period of 10 Business Days after written notice thereof is given to Administrative Borrower by Agent; or

(d) fails to perform or observe any covenant or other agreement contained in this Agreement, or in any of the other Loan Documents; in each case, other than any such covenant or agreement that is the subject of another provision of this Section 7 (in which event such other provision of this Section 7 shall govern), and such failure continues for a period of 20 Business Days after written notice thereof is given to Administrative Borrower by Agent;

7.3 If any of any Borrower’s or any of its Restricted Subsidiaries’ assets with an individual fair market value of $1,000,000 or more or assets with an aggregate fair market value of $3,000,000 or more is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any third Person and the same is not discharged before the earlier of 30 days after the date it first arises or 5 days prior to the date on which such property or asset is subject to forfeiture by such Borrower or the applicable Restricted Subsidiary;

7.4 If an Insolvency Proceeding is commenced by any Borrower or any of its Restricted Subsidiaries;

7.5 If an Insolvency Proceeding is commenced against any Borrower or any of its Restricted Subsidiaries, and any of the following events occur: (a) the applicable Borrower or Restricted Subsidiary consents to the institution of such Insolvency Proceeding against it, (b) the petition commencing the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency Proceeding is not dismissed within 60 calendar days of the date of the filing thereof, (d) an interim trustee is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, any Borrower or any such Restricted Subsidiary, or (e) an order for relief shall have been issued or entered therein;

7.6 If any Borrower or any of its Restricted Subsidiaries is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs;

7.7 If one or more judgments, orders, or awards involving an individual amount of $1,000,000 or more or an aggregate amount of $3,000,000, or more (except to the extent fully covered by insurance pursuant to which the insurer has accepted liability therefor in writing) shall be entered or filed against any Borrower or any of its Restricted Subsidiaries or with respect to any of their respective assets, and the same is not released, discharged, bonded against, or stayed pending appeal before 30 days after the date it first arises;

7.8 If there is a default in one or more agreements to which any Borrower or any of its Restricted Subsidiaries is a party with one or more third Persons relative to Indebtedness of any Borrower or any of its Restricted Subsidiaries involving an aggregate amount of $3,000,000 or more, and (a) such default (i) occurs at the final maturity of the obligations thereunder, or (ii) results in a right by such third Person(s), irrespective of whether exercised, to accelerate the maturity of the applicable Borrower’s or Restricted Subsidiary’s obligations thereunder, or (b) or any such Indebtedness obligations shall be required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), prior to the stated maturity thereof;

7.9 If any warranty, representation, statement, or Record made herein or in any other Loan Document or delivered to Agent or any Lender in connection with this Agreement or any other Loan Document proves to be untrue in any material respect as of the date of issuance or making or deemed making thereof;

7.10 If the obligation of any Guarantor under the Guaranty is limited or terminated by operation of law or by such Guarantor or any such Guarantor becomes the subject of an Insolvency Proceeding;

7.11 If the Security Agreement or any other Loan Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien on or security interest in the Collateral covered hereby or thereby, except as permitted under this Agreement;

7.12 Any provision of any Loan Document shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be contested by any Borrower or any of its Restricted Subsidiaries, or a proceeding shall be commenced by any Borrower or any of its Restricted Subsidiaries, or by any Governmental Authority having jurisdiction over any Borrower or any of its Restricted Subsidiaries, seeking to establish the invalidity or unenforceability thereof, or any Borrower or any of its Restricted Subsidiaries shall deny that it has any liability or obligation purported to be created under any Loan Document;

7.13 If any Change of Control shall have occurred;

7.14 If (a) there shall occur and be continuing any “Event of Default” (or any comparable term) under, and as defined in any Indenture Document, (b) any of the Obligations for any reason shall cease to be “Credit Agreement Secured Obligations” (or any comparable terms) under, and as defined in the Intercreditor Agreement, (c) any Indebtedness other than the Obligations shall constitute “Credit Agreement Senior

Obligations” (or any comparable term) under, and as defined in, any Intercreditor Agreement or any other document evidencing or governing any Indebtedness that has been contractually subordinated in right of payment to the Obligations, except as expressly permitted by this Agreement, (d) any holder of any Senior Note shall fail to perform or comply with any of the subordination provisions of the documents evidencing or governing such Indebtedness, or (e) the subordination provisions of the Intercreditor Agreement shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against any holder of such Indebtedness; or

7.15 If there occurs one or more ERISA Events which results in or otherwise is associated with liability of any Borrower, any of its Restricted Subsidiaries, or any of their respective ERISA Affiliates in excess of $3,000,000 in the aggregate during the term of this Agreement.

8. THE LENDER GROUP’S RIGHTS AND REMEDIES.

8.1 Rights and Remedies. Upon the occurrence, and during the continuation, of an Event of Default, the Required Lenders (at their election but without notice of their election and without demand) may authorize and instruct Agent to do any one or more of the following on behalf of the Lender Group (and Agent, acting upon the instructions of the Required Lenders, shall do the same on behalf of the Lender Group), all of which are authorized by Borrowers:

(a) Declare all or any portion of the Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable;

(b) Cease or restrict advancing money or extending credit to or for the benefit of Borrowers under this Agreement, under any of the Loan Documents, or under any other agreement between Borrowers and the Lender Group;

(c) Terminate this Agreement and any of the other Loan Documents as to any future liability or obligation of the Lender Group, but without affecting any of the Agent’s Liens in the Collateral and without affecting the Obligations; and

(d) The Lender Group shall have all other rights and remedies available at law or in equity or pursuant to any other Loan Document.

The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default described in Section 7.4 or Section 7.5, in addition to the remedies set forth above, without any notice to Borrowers or any other Person or any act by the Lender Group, the Commitments shall automatically terminate and the Obligations then outstanding, together with all accrued and unpaid interest thereon and all fees and all other amounts due under this Agreement and the other Loan Documents, shall automatically and immediately become due and payable, without presentment, demand, protest, or notice of any kind, all of which are expressly waived by Borrowers.

8.2 Remedies Cumulative. The rights and remedies of the Lender Group under this Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing waiver. No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it.

9. TAXES AND EXPENSES.

If any Borrower or any of its Restricted Subsidiaries fails to pay any monies (whether taxes, assessments, insurance premiums, or, in the case of leased properties or assets, rents or other amounts payable

under such leases) due to third Persons, or fails to make any deposits or furnish any required proof of payment or deposit, all as required under the terms of this Agreement, then, Agent, in its sole discretion and without prior notice to such Person, may do any or all of the following: (a) except for payments which are the subject of a Permitted Protest, make payment of the same or any part thereof, (b) set up such reserves against the Borrowing Base or the Maximum Revolver Amount as Agent deems necessary in its Permitted Discretion to protect the Lender Group from the exposure created by such failure, or (c) in the case of the failure to comply with Section 5.8 hereof, obtain and maintain insurance policies of the type described in Section 5.8 and take any action with respect to such policies as Agent deems prudent in its Permitted Discretion. Any such amounts paid by Agent shall constitute Lender Group Expenses and any such payments shall not constitute an agreement by the Lender Group to make similar payments in the future or a waiver by the Lender Group of any Event of Default under this Agreement. Except in connection with payments made by Agent pursuant to clause (a) above, Agent need not inquire as to, or contest the validity of, any such expense, tax, or Lien and the receipt of the usual official notice for the payment thereof shall be conclusive evidence that the same was validly due and owing.

10. WAIVERS; INDEMNIFICATION.

10.1 Demand; Protest; etc. Each Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held by the Lender Group on which any Borrower may in any way be liable.

10.2 The Lender Group’s Liability for Collateral. Each Borrower hereby agrees that: (a) so long as Agent complies with its obligations, if any, under the Code, the Lender Group shall not in any way or manner be liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the Collateral shall be borne by Borrowers.

10.3 Indemnification. Each Borrower shall pay, indemnify, defend, and hold the Agent-Related Persons, the Lender-Related Persons, and each Participant (each, an “Indemnified Person”) harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties and damages, and all reasonable fees and disbursements of attorneys, experts and consultants and other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution, delivery, enforcement, performance, or administration (including any restructuring or workout with respect hereto) of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby or the monitoring of Borrowers’ and their respective Restricted Subsidiaries’ compliance with the terms of the Loan Documents, (b) with respect to any investigation, litigation, or proceeding related to this Agreement, any other Loan Document, or the use of the proceeds of the credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto, and (c) in connection with or arising out of any presence or release of Hazardous Materials at, on, under, to or from any assets or properties owned, leased or operated by any Borrower or any of its Subsidiaries or any Environmental Actions, Environmental Liabilities and Costs or Remedial Actions related in any way to any such assets or properties of any Borrower or any of its Subsidiaries (all the foregoing, collectively, the “Indemnified Liabilities”) provided, however, that any claim with respect to taxes should be governed solely by Section 15.11. The foregoing to the contrary notwithstanding, Borrowers shall have no obligation to any Indemnified Person under this Section 10.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified Person. This provision shall survive the termination of this Agreement and the repayment of the Obligations. If any Indemnified Person makes any payment to any other Indemnified Person with respect to an Indemnified Liability as to which

Borrowers were required to indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed by Borrowers with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

11. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands by Borrowers or Agent to the other relating to this Agreement or any other Loan Document shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as Parent, Administrative Borrower or Agent, as applicable, may designate to each other in accordance herewith), or telefacsimile to Borrowers in care of Administrative Borrower or to Agent, as the case may be, at its address set forth below:

	If to Parent of Administrative Borrower:	ALTRA INDUSTRIAL MOTION, INC.
		14 Hayward St.
		Quincy, Massachusetts 02171
		Attn: Michael L. Hurt
		Fax No.: (617) 689-6202


	with copies to:	GENSTAR CAPITAL, L.P.
		Four Embarcadero Center
		Suite 1900
		San Francisco, CA 94111
		Attn: Darren J. Gold
		Fax No.: (415) 834-2383

		and

		WEIL, GOTSHAL & MANGES LLP
		200 Crescent Court, Suite 300
		Dallas, Texas 75201
		Attn: Angela L. Fontana, Esq.
		Fax No.: (214) 746-7777

	If to Agent:	WELLS FARGO FOOTHILL, INC.
		One Boston Place
		Boston, Massachusetts 02108
		Attn: Business Finance Manager
		Fax No.: (617) 523-5839

	with copies to:	MORRISON & FOERSTER LLP
		1290 Avenue of the Americas, 40^th Floor
		New York, New York 10104-0050
		Attn: Mark B. Joachim, Esq.
		Fax No.: (212) 468-7900

Agent and Borrowers may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other party. All notices or demands sent in accordance with this Section 11, other than notices by Agent in connection with enforcement rights against the Collateral under the provisions of the Code, shall be deemed received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail or, where permitted by law, transmitted by telefacsimile or any other method set forth above.

12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b).

(c) EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

13.1 Assignments and Participations.

(a) Any Lender may assign and delegate to one or more assignees (each an “Assignee”) that are Eligible Transferees all, or any ratable part of all, of the Obligations, the Commitments and the other rights and obligations of such Lender hereunder and under the other Loan Documents, in a minimum amount of $5,000,000; provided, however, that Borrowers and Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, have been given to Administrative Borrower and Agent by such Lender and the Assignee, (ii) such

Lender and its Assignee have delivered to Administrative Borrower and Agent an Assignment and Acceptance, and (iii) the assigning Lender or Assignee has paid to Agent for Agent’s separate account a processing fee in the amount of $3,500. Anything contained herein to the contrary notwithstanding, the payment of any fees shall not be required and the Assignee need not be an Eligible Transferee if such assignment is in connection with any merger, consolidation, sale, transfer, or other disposition of all or any substantial portion of the business or loan portfolio of the assigning Lender.

(b) From and after the date that Agent notifies the assigning Lender (with a copy to Administrative Borrower) that it has received an executed Assignment and Acceptance and payment of the above-referenced processing fee and the satisfaction of the other conditions in Section 13.1(a), (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assigning Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to Section 10.3 hereof) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto), and such assignment shall effect a novation between Borrowers and the Assignee; provided, however, that nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Article 16 and Section 16.7 of this Agreement.

(c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto, (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrowers or the performance or observance by Borrowers of any of their obligations under this Agreement or any other Loan Document furnished pursuant hereto, (iii) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such Assignee will, independently and without reliance upon Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (v) such Assignee appoints and authorizes Agent to take such actions and to exercise such powers under this Agreement as are delegated to Agent, by the terms hereof, together with such powers as are reasonably incidental thereto, and (vi) such Assignee agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

(d) Immediately upon Agent’s receipt of the required processing fee payment and the fully executed Assignment and Acceptance and the satisfaction of the other conditions in Section 13.1(a), this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro tanto.

(e) Any Lender may at any time sell to one or more commercial banks, financial institutions, or other Persons (a “Participant”) participating interests in all or any portion of its Obligations, the Commitment, and the other rights and interests of that Lender (the “Originating Lender”) hereunder and under the other Loan Documents; provided, however, that (i) the Originating Lender shall remain a “Lender” for all purposes of this Agreement and the other Loan Documents and the Participant receiving the participating interest in the Obligations, the Commitments, and the other rights and interests of the Originating Lender

hereunder shall not constitute a “Lender” hereunder or under the other Loan Documents and the Originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender’s rights and obligations under this Agreement and the other Loan Documents, (iv) no Originating Lender shall transfer or grant any participating interest under which the Participant has the right to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would (A) extend the final maturity date of the Obligations hereunder in which such Participant is participating, (B) reduce the interest rate applicable to the Obligations hereunder in which such Participant is participating, (C) release all or substantially all of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Obligations hereunder in which such Participant is participating, (D) postpone the payment of, or reduce the amount of, the interest or fees payable to such Participant through such Lender, or (E) change the amount or due dates of scheduled principal repayments or prepayments or premiums, and (v) all amounts payable by Borrowers hereunder shall be determined as if such Lender had not sold such participation, except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. The rights of any Participant only shall be derivative through the Originating Lender with whom such Participant participates and no Participant shall have any rights under this Agreement or the other Loan Documents or any direct rights as to the other Lenders, Agent, Borrowers, the Collections of Borrowers or their respective Subsidiaries, the Collateral, or otherwise in respect of the Obligations. No Participant shall have the right to participate directly in the making of decisions by the Lenders among themselves.

(f) In connection with any such assignment or participation or proposed assignment or participation, a Lender may, subject to the provisions of Section 16.7, disclose all documents and information which it now or hereafter may have relating to Borrowers and their respective Restricted Subsidiaries and their respective businesses.

(g) Any other provision in this Agreement notwithstanding, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR § 203.24, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law.

(h) Agent (on behalf of Borrowers) shall maintain, or cause to be maintained, a register (the “Register”) on which it enters the name of a Lender as the registered owner of each Advance held by such Lender. Other than in connection with an assignment by a Lender of all or any portion of its Commitment to an Affiliate of such Lender (i) a Registered Loan may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register and (ii) any assignment or sale of all or part of such Registered Loan may be effected only by registration of such assignment or sale on the Register, together with the surrender of any note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such note, if any, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s). Prior to the registration of assignment or sale of any Registered Loan, Borrowers shall treat the Person in whose name such Loan is registered as the owner thereof for the purpose of receiving all payments thereon and for all other purposes, notwithstanding notice to the contrary. In the case of any assignment by a Lender of all or any portion of its Commitment to an Affiliate of such Lender, and which assignment is not recorded in the Register, the assigning Lender, on behalf of Borrowers, shall maintain a register comparable to the Register.

13.2 Successors. This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties; provided, however, that Borrowers may not assign this Agreement or any rights or duties hereunder without the Lenders’ prior written consent and any prohibited assignment shall be absolutely void ab initio. No consent to assignment by the Lenders shall release any Borrower from its Obligations. A Lender may assign this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder pursuant to Section 13.1 hereof and, except as expressly required pursuant to Section 13.1 hereof, no consent or approval by any Borrower is required in connection with any such assignment.

14. AMENDMENTS; WAIVERS.

14.1 Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any other Loan Document (other than Bank Product Agreements), and no consent with respect to any departure by Borrowers or any of their respective Restricted Subsidiaries therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by Agent at the written request of the Required Lenders) and Administrative Borrower (on behalf of all Loan Parties) and then any such waiver or consent shall be effective, but only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by all of the Lenders affected thereby and Administrative Borrower (on behalf of all Loan Parties), do any of the following:

(a) increase or extend any Commitment of any Lender,

(b) postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under any other Loan Document,

(c) reduce the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any other Loan Document,

(d) change the Pro Rata Share that is required to take any action hereunder,

(e) amend or modify this Section or any provision of this Agreement providing for consent or other action by all Lenders,

(f) other than as permitted by Section 15.12, release Agent’s Lien in and to any of the Collateral,

(g) change the definition of “Required Lenders” or “Pro Rata Share”,

(h) contractually subordinate any of the Agent’s Liens,

(i) release any Borrower or any Guarantor from any obligation for the payment of money,

(j) change the definition of Borrowing Base or the definitions of Eligible Accounts, Eligible Inventory, Maximum Revolver Amount, or change Section 2.1(b), or

(k) amend any of the provisions of Section 15.

and, provided further, however, that no amendment, waiver or consent shall, unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as applicable, affect the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable, under this Agreement or any other Loan Document. The foregoing notwithstanding, any amendment, modification, waiver, consent, termination, or release of, or with respect to, any provision of this Agreement or any other Loan Document that relates only to the relationship of the Lender

Group among themselves, and that does not affect the rights or obligations of Borrowers, shall not require consent by or the agreement of Borrowers.

14.2 Replacement of Holdout Lender.

(a) If any action to be taken by the Lender Group or Agent hereunder requires the unanimous consent, authorization, or agreement of all Lenders, and a Lender (“Holdout Lender”) fails to give its consent, authorization, or agreement, then Agent, upon at least 5 Business Days prior irrevocable notice to the Holdout Lender, may permanently replace the Holdout Lender with one or more substitute Lenders (each, a “Replacement Lender”), and the Holdout Lender shall have no right to refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given.

(b) Prior to the effective date of such replacement, the Holdout Lender and each Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the Holdout Lender being repaid its share of the outstanding Obligations (including an assumption of its Pro Rata Share of the Risk Participation Liability) without any premium or penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, the Holdout Lender shall be deemed to have executed and delivered such Assignment and Acceptance. The replacement of any Holdout Lender shall be made in accordance with the terms of Section 13.1. Until such time as the Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other rights and obligations of the Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender shall remain obligated to make the Holdout Lender’s Pro Rata Share of Advances and to purchase a participation in each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk Participation Liability of such Letter of Credit.

14.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to exercise any right, remedy, or option under this Agreement or any other Loan Document, or delay by Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by Agent or any Lender on any occasion shall affect or diminish Agent’s and each Lender’s rights thereafter to require strict performance by Borrowers or any of their respective Restricted Subsidiaries of any provision of this Agreement. Agent’s and each Lender’s rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy that Agent or any Lender may have.

15. AGENT; THE LENDER GROUP.

15.1 Appointment and Authorization of Agent. Each Lender hereby designates and appoints WFF as its representative under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes Agent to execute and deliver each of the other Loan Documents on its behalf and to take such other action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to Agent by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Agent agrees to act as such on the express conditions contained in this Section 15. The provisions of this Section 15 (other than the proviso to Section 15.11(a)) are solely for the benefit of Agent, and the Lenders, and Borrowers and their respective Restricted Subsidiaries shall have no rights as a third party beneficiary of any of the provisions contained herein. Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent; it being expressly understood and agreed that the use of the word “Agent” is for convenience only, that WFF is merely the representative of the Lenders, and only has the contractual duties set forth herein. Except as expressly otherwise provided in

this Agreement, Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions that Agent expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this Agreement remains in effect: (a) maintain, in accordance with the Loan Documents and its customary business practices, ledgers and records reflecting the status of the Obligations, the Collateral, the Collections of Borrowers and their respective Restricted Subsidiaries, and related matters, (b) execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as provided in the Loan Documents, (d) exclusively receive, apply, and distribute the Collections of Borrowers and their respective Restricted Subsidiaries as provided in the Loan Documents, (e) open and maintain such bank accounts and cash management arrangements as Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes with respect to the Collateral and the Collections of Borrowers and their respective Restricted Subsidiaries, (f) perform, exercise, and enforce any and all other rights and remedies of the Lender Group with respect to the Loan Parties, the Obligations, the Collateral, the Collections of Borrowers and their respective Restricted Subsidiaries, or otherwise related to any of same as provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents.

15.2 Delegation of Duties. Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects as long as such selection was made without gross negligence or willful misconduct.

15.3 Liability of Agent. None of the Agent-Related Persons shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by any Borrower or any Subsidiary or Affiliate of any Borrower, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the books and records or properties of Borrowers or the books or records or properties of any of Borrowers’ Subsidiaries or Affiliates.

15.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telefacsimile or other electronic method of transmission, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrowers or counsel to any Lender), independent accountants and other experts selected by Agent. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless Agent shall first receive such advice of legal counsel and until such advice is received, Agent shall act, or refrain from acting, as it deems reasonably advisable. If Agent so requests, it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Agent shall in all cases be fully protected in acting, or in

refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the requisite Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.

15.5 Notice of Default or Event of Default. Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the account of the Lenders and, except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Administrative Borrower referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a “notice of default.” Agent promptly will notify the Lenders of its receipt of any such notice or of any Event of Default of which Agent has actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default. Each Lender shall be solely responsible for giving any notices to its Participants, if any. Subject to Section 15.4, Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with Section 8; provided, however, that unless and until Agent has received any such request, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable.

15.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of Borrowers and their respective Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of Borrowers and any other Person party to a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrowers. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of Borrowers and any other Person party to a Loan Document. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of Borrowers and any other Person party to a Loan Document that may come into the possession of any of the Agent-Related Persons.

15.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender Group Expenses to the extent Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including court costs, attorneys fees and expenses, fees and expenses of financial accountants, advisors, consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders for such expenses pursuant to this Agreement or otherwise. Agent is authorized and directed to deduct and retain sufficient amounts from the Collections of Borrowers and their respective Restricted Subsidiaries received by Agent to reimburse Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders. In the event Agent is not reimbursed for such costs and expenses from the Collections of Borrowers and their respective Restricted Subsidiaries received by Agent, each Lender hereby agrees that it is and shall be obligated to pay to or reimburse Agent for the amount of such Lender’s Pro Rata Share thereof. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrowers

and without limiting the obligation of Borrowers to do so), according to their Pro Rata Shares, from and against any and all Indemnified Liabilities; provided, however, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting solely from such Person’s gross negligence or willful misconduct nor shall any Lender be liable for the obligations of any Defaulting Lender in failing to make an Advance or other extension of credit hereunder. Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender’s Pro Rata Share of any costs or out of pocket expenses (including reasonable attorneys, accountants, advisors, and consultants fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein or therein, to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrowers. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Agent.

15.8 Agent in Individual Capacity. WFF and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Borrowers and their respective Subsidiaries and Affiliates and any other Person party to any Loan Documents as though WFF were not Agent hereunder, and, in each case, without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, WFF or its Affiliates may receive information regarding Borrowers or their respective Affiliates and any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrowers or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Agent will use its reasonable best efforts to obtain), Agent shall not be under any obligation to provide such information to them. The terms “Lender” and “Lenders” include WFF in its individual capacity.

15.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the Lenders. If Agent resigns under this Agreement, the Required Lenders shall appoint a successor Agent for the Lenders. If no successor Agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with the Lenders, a successor Agent. If Agent has materially breached or failed to perform any material provision of this Agreement or of applicable law, the Required Lenders may agree in writing to remove and replace Agent with a successor Agent from among the Lenders. In any such event, upon the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term “Agent” shall mean such successor Agent and the retiring Agent’s appointment, powers, and duties as Agent shall be terminated. After any retiring Agent’s resignation hereunder as Agent, the provisions of this Section 15 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor Agent has accepted appointment as Agent by the date which is 45 days following a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders appoint a successor Agent as provided for above.

15.10 Lender in Individual Capacity. Any Lender and its respective Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with Borrowers and their respective Subsidiaries and Affiliates and any other Person party to any Loan Documents as though such Lender were not a Lender hereunder without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, such Lender and its respective Affiliates may receive information regarding Borrowers or their Affiliates and any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrowers or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver such

Lender will use its reasonable best efforts to obtain), such Lender shall not be under any obligation to provide such information to them. With respect to the Swing Loans and Protective Advances, Swing Lender shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the sub-agent of Agent.

15.11 Withholding Taxes.

(a) All payments made by any Borrower hereunder or under any note or other Loan Document will be made without setoff, counterclaim, or other defense. In addition, except as provided in this Section, all such payments will be made free and clear of, and without deduction or withholding for, any present or future Taxes, and in the event any deduction or withholding of Taxes is required, each Borrower shall comply with the penultimate sentence of this Section 15.11(a). “Taxes” shall mean, any taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein with respect to such payments (but excluding (i) any tax imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein measured by or based on the net income, capital, receipts or profits of any Lender, (ii) franchise or similar taxes, (iii) any non-United States taxes imposed by the jurisdictions under the laws of which the Lender or Agent, as the case may be, is organized, conducts business or has a present or former connection (other than by reason of the transactions contemplated hereby or by the other Loan Documents), or any political subdivision thereof, in effect on the Closing Date (or, in the case of (A) an Assignee, the date of the Assignment and Acceptance, (B) a successor Lender, the date such successor Lender becomes a Lender hereunder and (C) a successor Agent, the date of the appointment of such Agent) applicable to such Lender or Agent, as the case may be, but not excluding any United States withholding tax payable with respect to interest arising under any Loan Document as a result of any change in such laws occurring after the Closing Date (or the date of such Assignment and Acceptance, the date such successor Lender becomes a Lender or the date of the appointment of such Agent), (iv) any taxes that are attributable to such Lender’s or Agent’s failure to comply with the requirements of Section 15.11(b) and (v) all liabilities, penalties and interest with respect to any of the forgoing excluded taxes) and all interest, penalties or similar liabilities with respect thereto. If any Taxes are so levied or imposed, each Borrower agrees to pay the full amount of such Taxes and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement, any note, or Loan Document, including any amount paid pursuant to this Section 15.11(a) after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein; provided, however, that Borrowers shall not be required to increase any such amounts if the increase in such amount payable results from Agent’s or such Lender’s own willful misconduct or gross negligence (as finally determined by a court of competent jurisdiction). Each Borrower will furnish to Agent as promptly as is commercially reasonable after the date the payment of any Tax is due pursuant to applicable law certified copies of any tax receipts provided by the taxing authority evidencing such payment by any Borrower.

(b) (i) Each Lender, Assignee, successor Lender, Agent or successor Agent that is not a “United States person” within the meaning of Section 7701(a)(30) of the IRC (each, a “Foreign Lender”) shall deliver to the Administrative Borrower and Agent, on or prior to the date which is fifteen (15) Business Days after the Closing Date (or upon accepting an assignment of an interest herein), two duly signed, properly completed copies of either IRS Form W-8BEN or any successor thereto (relating to such Foreign Lender and entitling it to an exemption from, or reduction of, United States withholding tax on all payments to be made to such Foreign Lender by a Borrower or any other Loan Party pursuant to this Agreement or any other Loan Document) or IRS Form W-8ECI or any successor thereto (relating to all payments to be made to such Foreign Lender by a Borrower or any other Loan Party pursuant to this Agreement or any other Loan Document) or such other evidence reasonably satisfactory to Administrative Borrower and Agent that such Foreign Lender is entitled to an exemption from, or reduction of, United States withholding tax, including any exemption pursuant to Section 881(c) of the IRC, and in the case of a Foreign Lender claiming such an exemption under Section 881(c) of the IRC, a certificate that establishes in writing to the Administrative Borrower and the Administrative Agent that such Foreign Lender is not (i) a “bank” as defined in Section 881(c)(3)(A) of the IRC, (ii) a 10-percent shareholder within the meaning of Section 871(h)(3)(B) of the IRC, or (iii) a Controlled

Foreign Corporation related to a Borrower with the meaning of Section 864(d) of the IRC. Thereafter and from time to time, each such Foreign Lender shall (A) within a commercially reasonable period submit to the Administrative Borrower and Agent such additional duly and properly completed and signed copies of one or more of such forms or certificates (or such successor forms or certificates as shall be adopted from time to time by the relevant United States taxing authorities) as may then be available under then current United States laws and regulations to avoid, or such evidence as is reasonably satisfactory to the Administrative Borrower and Agent of any available exemption from, or reduction of, United States withholding taxes in respect of all payments to be made to such Foreign Lender by a Borrower or other Loan Party pursuant to this Agreement, or any other Loan Document, in each case, (1) on or before the date that any such form, certificate or other evidence expires or becomes obsolete, (2) after the occurrence of any event requiring a change in the most recent form, certificate or evidence previously delivered by it to the Administrative Borrower and Agent and (3) from time to time thereafter if reasonably requested by the Administrative Borrower or the Administrative Agent, and (B) within a commercially reasonable period notify the Administrative Borrower and Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction.

(ii) The Borrowers shall not be required to pay any additional amount or any indemnity payment to (A) any Foreign Lender with respect to any taxes required to be deducted or withheld solely on the basis of the information, certificates or statements of exemption such Lender transmits pursuant to this Section 15.11(b) or (B) any Lender if such Lender shall have failed to satisfy the foregoing provisions of this Section 15.11(b).

(c) If a Lender claims an exemption from withholding tax in a jurisdiction other than the United States, Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent any such form or forms, as may be required under the laws of such jurisdiction as a condition to exemption from, or reduction of, foreign withholding or backup withholding tax before receiving its first payment under this Agreement and at any other time reasonably requested by Agent or Administrative Borrower.

Lender agrees promptly to notify Agent and Administrative Borrower of any change in circumstances which would modify or render invalid any claimed exemption or reduction.

(d) If any Lender is entitled to a reduction in the applicable withholding tax, Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable withholding tax after taking into account such reduction. If the forms or other documentation required by subsection (b) or (c) of this Section 15.11 are not delivered to Agent, then Agent may withhold from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax.

(e) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that Agent did not properly withhold tax from amounts paid to or for the account of any Lender due to a failure on the part of the Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify and hold Agent harmless for all amounts paid, directly or indirectly, by Agent, as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to Agent under this Section 15.11, together with all costs and expenses (including attorneys fees and expenses). The obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of Agent.

(f) Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 15.11(a) with respect to such Lender, it will, if requested by the Administrative Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any loans affected by such event with the object of avoiding the consequences of such event; provided, that such designation is made on terms that cause such Lender and its lending office(s) to suffer no

economic, legal or regulatory disadvantage, and provided, further, that nothing in this Section shall affect or postpone any of the obligations of the Borrowers or the rights of any Lender pursuant to Section 15.11(a). In determining whether designating another lending office would cause such Lender or its lending office(s) to suffer economic disadvantage, such Lender shall disregard any economic disadvantage that the Administrative Borrower agrees, in form and substance reasonably satisfactory to such Lender, to indemnify and hold such Lender harmless therefrom. If, after such reasonable efforts by such Lender, such Lender does not so designate a different one of its lending offices so as to avoid the consequences of such event, then the Administrative Borrower may, at its sole expense and effort, upon notice to such Lender and the Agent, require such Lender to assign and delegate, without recourse, all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment, and which assignee shall be reasonably acceptable to Agent). A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling such Borrower to require such assignment and delegation cease to apply.

15.12 Collateral Matters.

(a) The Lenders hereby irrevocably authorize Agent, at its option and in its sole discretion, to release any Lien on any Collateral (i) upon the termination of the Commitments and payment and satisfaction in full by Borrowers of all non-contingent Obligations, (ii) constituting property being sold or disposed of if a release is required or desirable in connection therewith and if Administrative Borrower certifies to Agent that the sale or disposition is permitted under Section 6.4 of this Agreement or the other Loan Documents (and Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property in which none of any Borrower or any of its Restricted Subsidiaries owned any interest at the time the Agent’s Lien was granted nor at any time thereafter, or (iv) constituting property leased to a Borrower or any of its Restricted Subsidiaries under a lease that has expired or is terminated in a transaction permitted under this Agreement. Except as provided above, Agent will not execute and deliver a release of any Lien on any Collateral without the prior written authorization of (y) if the release is of all or substantially all of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or Administrative Borrower at any time, the Lenders will confirm in writing Agent’s authority to release any such Liens on particular types or items of Collateral pursuant to this Section 15.12; provided, however, that (1) Agent shall not be required to execute any document necessary to evidence such release on terms that, in Agent’s opinion, would expose Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty, and (2) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of Borrowers in respect of) all interests retained by Borrowers or any of their respective Restricted Subsidiaries, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral.

(b) Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by Borrowers or any of their respective Restricted Subsidiaries or is cared for, protected, or insured or has been encumbered, or that the Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein, Agent may act in any manner it may deem appropriate, in its sole discretion given Agent’s own interest in the Collateral in its capacity as one of the Lenders and that Agent shall have no other duty or liability whatsoever to any Lender as to any of the foregoing, except as otherwise provided herein.

15.13 Restrictions on Actions by Lenders; Sharing of Payments.

(a) Each of the Lenders agrees that it shall not, without the express written consent of Agent, set off against the Obligations, any amounts owing by such Lender to Borrowers or any of their respective Restricted Subsidiaries or any deposit accounts of Borrowers or any of their respective Restricted Subsidiaries now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall not, unless specifically requested to do so in writing by Agent, take or cause to be taken any action, including, the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.

(b) If, at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations, except for any such proceeds or payments received by such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments from Agent in excess of such Lender’s ratable portion of all such distributions by Agent, such Lender promptly shall (A) turn the same over to Agent, in kind, and with such endorsements as may be required to negotiate the same to Agent, or in immediately available funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (B) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided, however, that to the extent that such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment.

15.14 Agency for Perfection. Agent hereby appoints each other Lender as its agent (and each Lender hereby accepts such appointment) for the purpose of perfecting the Agent’s Liens in assets which, in accordance with Article 8 or Article 9, as applicable, of the Code can be perfected only by possession or control. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver possession or control of such Collateral to Agent or in accordance with Agent’s instructions.

15.15 Payments by Agent to the Lenders. All payments to be made by Agent to the Lenders shall be made by bank wire transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to Agent. Concurrently with each such payment, Agent shall identify whether such payment (or any portion thereof) represents principal, premium, fees, or interest of the Obligations.

15.16 Concerning the Collateral and Related Loan Documents. Each member of the Lender Group authorizes and directs Agent to enter into this Agreement and the other Loan Documents. Each member of the Lender Group agrees that any action taken by Agent in accordance with the terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders.

15.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information. By becoming a party to this Agreement, each Lender:

(a) is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report (each a “Report” and collectively, “Reports”) prepared by or at the request of Agent, and Agent shall so furnish each Lender with such Reports,

(b) expressly agrees and acknowledges that neither the Borrowers nor the Agent (i) make any representation or warranty as to the accuracy of any Report, and (ii) shall be liable for any information contained in any Report,

(c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or other party performing any audit or examination will inspect only specific information regarding Borrowers and their respective Restricted Subsidiaries and will rely significantly upon the books and records of Borrowers and their respective Restricted Subsidiaries, as well as on representations of Borrowers’ and their respective Restricted Subsidiaries’ personnel,

(d) agrees to keep all Reports and other material, non-public information regarding Borrowers and their respective Restricted Subsidiaries and their operations, assets, and existing and contemplated business plans in a confidential manner in accordance with Section 16.7, and

(e) without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold Agent and any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to Borrowers, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold Agent, and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including, attorneys fees and costs) incurred by Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.

In addition to the foregoing: (x) any Lender may from time to time request of Agent in writing that Agent provide to such Lender a copy of any report or document provided by Borrowers and their respective Restricted Subsidiaries to Agent that has not been contemporaneously provided by Borrowers and their respective Restricted Subsidiaries to such Lender, and, upon receipt of such request, Agent promptly shall provide a copy of same to such Lender, (y) to the extent that Agent is entitled, under any provision of the Loan Documents, to request additional reports or information from Borrowers and their respective Restricted Subsidiaries, any Lender may, from time to time, reasonably request Agent to exercise such right as specified in such Lender’s notice to Agent, whereupon Agent promptly shall request of the applicable Person the additional reports or information reasonably specified by such Lender, and, upon receipt thereof from the applicable Person, Agent promptly shall provide a copy of same to such Lender, and (z) any time that Agent renders to Administrative Borrower a statement regarding the Loan Account, Agent shall send a copy of such statement to each Lender.

15.18 Several Obligations; No Liability. Notwithstanding that certain of the Loan Documents now or hereafter may have been or will be executed only by or in favor of Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of Agent (if any) to make any credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis, according to their Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time outstanding, the amount of their Commitments. Nothing contained herein shall confer upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely responsible for notifying its

Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other Lender. Except as provided in Section 15.7, no member of the Lender Group shall have any liability for the acts of any other member of the Lender Group. No Lender shall be responsible to any Borrower or any other Person for any failure by any other Lender to fulfill its obligations to make credit available hereunder, nor to advance for it or on its behalf in connection with its Commitment, nor to take any other action on its behalf hereunder or in connection with the financing contemplated herein.

15.19 Bank Product Providers. Each Bank Product Provider shall be deemed a party hereto for purposes of any reference in a Loan Document to the parties for whom Agent is acting; it being understood and agreed that the rights and benefits of such Bank Product Provider under the Loan Documents consist exclusively of such Bank Product Provider’s right to share in payments and collections out of the Collateral as more fully set forth herein. In connection with any such distribution of payments and collections, Agent shall be entitled to assume no amounts are due to any Bank Product Provider unless such Bank Product Provider has notified Agent in writing of the amount of any such liability owed to it prior to such distribution.

16. GENERAL PROVISIONS.

16.1 Effectiveness. This Agreement shall be binding and deemed effective when executed by each Borrower, Agent, and each Lender whose signature is provided for on the signature pages hereof.

16.2 Section Headings. Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.

16.3 Interpretation. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against the Lender Group or Borrowers, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto.

16.4 Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

16.5 Counterparts; Electronic Execution. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis.

16.6 Revival and Reinstatement of Obligations. If the incurrence or payment of the Obligations by any Borrower or any Guarantor or the transfer to the Lender Group of any property should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (collectively, a “Voidable Transfer”), and if the Lender Group is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that

the Lender Group is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of the Lender Group related thereto, the liability of Borrowers or such Guarantor automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.

16.7 Confidentiality. Agent and Lenders each individually (and not jointly or jointly and severally) agree that material, non-public information regarding Borrowers and their respective Subsidiaries, their operations, assets, and existing and contemplated business plans shall be treated by Agent and the Lenders in a confidential manner, and shall not be disclosed by Agent and the Lenders to Persons who are not parties to this Agreement, except: (a) to attorneys for and other advisors, accountants, auditors, and consultants to any member of the Lender Group for matters in connection with this Agreement, (b) to Subsidiaries and Affiliates of any member of the Lender Group (including the Bank Product Providers), provided that any such Subsidiary or Affiliate shall have agreed to receive such information hereunder subject to the terms of this Section 16.7, (c) as may be required by statute, decision, or judicial or administrative order, rule, or regulation, (d) as may be agreed to in advance by Parent or Administrative Borrower or its Subsidiaries or as requested or required by any Governmental Authority pursuant to any subpoena or other legal process, (e) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by Agent or the Lenders or their respective Affiliates and Subsidiaries), (f) in connection with any assignment, prospective assignment, sale, prospective sale, participation or prospective participations, or pledge or prospective pledge of any Lender’s interest under this Agreement, provided that any such assignee, prospective assignee, purchaser, prospective purchaser, participant, prospective participant, pledgee, or prospective pledgee shall have agreed in writing to receive such information hereunder and keep it confidential subject to the terms of this Section, and (g) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents. The provisions of this Section 16.7 shall survive for 2 years after the payment in full of the Obligations.

16.8 Integration. This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.

16.9 Altra Industrial Motion, Inc. as Agent for Borrowers. Each Borrower hereby irrevocably appoints Altra Industrial Motion, Inc. as the borrowing agent and attorney-in-fact for all Borrowers (the “Administrative Borrower”) which appointment shall remain in full force and effect unless and until Agent shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another Loan Party has been appointed Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes the Administrative Borrower (a) to provide Agent with all notices with respect to Advances and Letters of Credit obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and (b) to take such action as the Administrative Borrower deems appropriate on its behalf to obtain Advances and Letters of Credit and to exercise such other powers as are reasonably necessary to carry out the purposes of this Agreement. It is understood that the handling of the Loan Account and Collateral in a combined fashion, as more fully set forth herein, is done solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient and economical manner and at their request, and that Lender Group shall not incur liability to any Borrower as a result hereof. Each Borrower expects to derive benefit, directly or indirectly, from the handling of the Loan Account and the Collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful performance of the integrated group. To induce the Lender Group to do so, and in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify each member of the Lender Group and hold each member of the Lender Group harmless against any and all liability, expense, loss or claim of damage or injury, made against the Lender Group by any Borrower or by any third party whosoever, arising from or incurred by reason of (a) the handling of the Loan Account and Collateral as herein provided, (b) the Lender Group’s relying on any instructions of the Administrative Borrower, or (c) any other action taken by the Lender Group hereunder or under the other Loan Documents, except that Borrowers will

have no liability to the relevant Agent-Related Person or Lender-Related Person under this Section 16.9 with respect to any liability that has been finally determined by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of such Agent-Related Person or Lender-Related Person, as the case may be.

[Signature pages to follow.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.

ALTRA INDUSTRIAL MOTION, INC., a Delaware corporation,
WARNER ELECTRIC LLC, a Delaware limited liability company,
KILIAN MANUFACTURING CORPORATION, a Delaware corporation,
WARNER ELECTRIC TECHNOLOGY LLC, a Delaware limited liability company,
FORMSPRAG LLC, a Delaware limited liability company,
BOSTON GEAR LLC, a Delaware limited liability company,
NUTTALL GEAR L L C, a Delaware limited liability company


By:
Name:			Michael L. Hurt
Title:			Chief Executive Officer


AMERIDRIVES INTERNATIONAL, L.P., a Delaware limited partnership,


By:		American Enterprises MPT Corp., its general partner

		By:
		Name:		Michael L. Hurt
		Title:		Chief Executive Officer

	WELLS FARGO FOOTHILL, INC.,
	a California corporation, as Agent and as a Lender

	By:
	Title:

EX-10.23 53 a2155511zex-10_23.htm EXHIBIT 10.23

Exhibit 10.23

EXECUTION COPY

SECURITY AGREEMENT

This SECURITY AGREEMENT (this “Agreement”) is made this 30th day of November, 2004, among Grantors listed on the signature pages hereof and those additional entities that hereafter become parties hereto by executing the form of Supplement attached hereto as Annex 1 (collectively, jointly and severally, “Grantors” and each individually “Grantor”), and WELLS FARGO FOOTHILL, INC., in its capacity as administrative agent for the Lender Group and the Bank Product Providers (together with its successors and assigns in such capacity, “Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement dated of even date herewith (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, including all exhibits and schedules thereto, the “Credit Agreement”) among Altra Industrial Motion, Inc., a Delaware corporation (“Parent”), each of its Subsidiaries identified on the signature pages thereof (Parent and such Subsidiaries, “Borrowers”), the lenders party thereto as “Lenders” (“Lenders”), and Agent, the Lender Group is willing to make certain financial accommodations available to Borrowers from time to time pursuant to the terms and conditions thereof;

WHEREAS, Agent has agreed to act as agent for the benefit of the Lender Group and the Bank Product Providers in connection with the transactions contemplated by the Credit Agreement and the other Loan Documents; and

WHEREAS, in order to induce the Lender Group to enter into the Credit Agreement and the other Loan Documents and to induce the Lender Group to make and extend the financial accommodations to Borrowers as provided for in the Credit Agreement, Grantors have agreed to grant a continuing security interest in and to the Collateral in order to secure the prompt and complete payment, observance and performance of, among other things, (a) the obligations of Grantors arising from this Agreement, the Credit Agreement, and the other Loan Documents, including, without limitation, the Guaranty, (b) all Bank Product Obligations, and (c) all Obligations of Borrowers (including, without limitation, any interest, fees or expenses that accrue after the filing of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any Insolvency Proceeding), plus reasonable attorneys fees and expenses if the obligations represented thereunder are collected by law, through an attorney-at-law, or under advice therefrom, to the extent such fees and expenses are required to be paid by Borrowers under the Credit Agreement (clauses (a), (b), and (c) being hereinafter referred to as the “Secured Obligations”), by the granting of the security interests contemplated by this Agreement.

NOW, THEREFORE, for and in consideration of the recitals made above and other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1. Defined Terms. All capitalized terms used herein (including, without limitation, in the preamble and recitals hereof) without definition shall have the meanings ascribed thereto in the Credit Agreement. In addition to those terms defined elsewhere in this Agreement, as used in this Agreement, the following terms shall have the following meanings:

(a) “Agent” has the meaning set forth in the preamble hereto.

(b) “Agreement” has the meaning set forth in the preamble hereto.

(d) “Chattel Paper” has the meaning set forth in Section 2.

(e) “Code” means the New York Uniform Commercial Code, as in effect from time to time; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, priority, or remedies with respect to Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies.

(f) “Collateral” has the meaning set forth in Section 2.

(g) “Commercial Tort Claims” has the meaning set forth in Section 2.

(h) “Copyrights” means all of the following now owned or hereafter adopted or acquired by a Grantor: copyrights and copyright registrations, including, without limitation, the copyright registrations and recordings thereof and all applications in connection therewith listed on Schedule 1 attached hereto and made a part hereof, and (i) all restorations, reversions, renewals or extensions thereof, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements thereof, (iii) the right to sue for past, present and future infringements thereof, and (iv) all of each Grantor’s rights corresponding thereto throughout the world.

(i) “Copyright Security Agreement” means each Copyright Security Agreement among Grantors, or any of them, and Agent, for the benefit of the Lender Group and the Bank Product Providers, in substantially the form of Exhibit A attached hereto.

(j) “Credit Agreement” has the meaning set forth in the recitals hereto.

(k) “General Intangibles” has the meaning set forth in Section 2.

(l) “Grantor” and “Grantors” have the meanings set forth in the preamble hereto.

(m) “Intellectual Property” means any and all Intellectual Property Licenses, Patents, Copyrights, Trademarks, the goodwill associated with such Trademarks, trade secrets and customer lists.

(n) “Intellectual Property Licenses” means any grant of a right to use any patent, trademark, copyright or other intellectual property, including software license agreements with any other party, whether the applicable Grantor is a licensee or licensor with respect to such rights, including, without limitation, the license agreements listed on Schedule 2 attached hereto and made a part hereof.

(o) “Investment Related Property” means (i) investment property (as that term is defined in the Code), and (ii) all of the following regardless of whether classified as investment property under the Code: all Pledged Interests, Pledged Operating Agreements, and Pledged Partnership Agreements.

(p) “Lenders” has the meaning set forth in the recitals hereto.

(q) “Negotiable Collateral” has the meaning set forth in Section 2.

(r) “Parent” has the meaning set forth in the recitals hereto.

(s) “Patents” means all of the following now owned or hereafter adopted or acquired by a Grantor: patents and patent applications, including, without limitation, the patents and patent applications listed on Schedule 3 attached hereto and made a part hereof, and (i) all reissues, continuations, continuations-in-part, substitutes, extensions or renewals thereof, and improvements thereon, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements thereof, (iii) the right to sue for past, present and future infringements thereof, and (iv) all of each Grantor’s rights corresponding thereto throughout the world.

(t) “Patent Security Agreement” means each Patent Security Agreement among Grantors, or any of them, and Agent, for the benefit of the Lender Group and the Bank Product Providers, in substantially the form of Exhibit B attached hereto.

(u) “Pledged Companies” means each Person listed on Schedule 4 hereto as a “Pledged Company,” together with each other Person, all or a portion of whose Stock is acquired or otherwise owned by a Grantor after the Closing Date.

(v) “Pledged Interests” means all of each Grantor’s right, title and interest in and to all of the Stock now or hereafter owned by such Grantor, regardless of class or designation, including, without limitation, in each of the Pledged Companies, and all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating thereto, including, without limitation, any certificates representing the Stock, the right to request after the occurrence and during the continuation of an Event of Default that such Stock be registered in the name of Agent or any of its nominees, the right to receive any certificates representing any of the Stock and the right to require that such certificates be delivered to Agent together with undated powers or assignments of investment securities with respect thereto, duly endorsed in blank by such Grantor, all warrants, options, share appreciation rights and other rights, contractual or otherwise, in respect thereof and of all dividends, distributions of income, profits, surplus, or other compensation by way of income or liquidating distributions, in cash or in kind, and cash, instruments, and other property from time to time received, receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange for any or all of the foregoing.

(w) “Pledged Interests Addendum” means a Pledged Interests Addendum substantially in the form of Exhibit C to this Agreement.

(x) “Pledged Operating Agreements” means all of each Grantor’s rights, powers, and remedies under the limited liability company operating agreements of the Pledged Companies that are limited liability companies, if any.

(y) “Pledged Partnership Agreements” means all of each Grantor’s rights, powers, and remedies under the partnership agreements of each of the Pledged Companies that are partnerships, if any.

(z) “Proceeds” has the meaning set forth in Section 2.

(aa) “Records” means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form.

(bb) “Secured Obligations” has the meaning set forth in the recitals hereto.

(cc) “Security Interest” has the meaning set forth in Section 2.

(dd) “Supporting Obligations” has the meaning set forth in Section 2.

(ee) “Trademarks” means all of the following now owned or hereafter adopted or acquired by a Grantor: trademarks, trade names, registered trademarks, trademark applications, service marks, registered service marks and service mark applications, including, without limitation, the trade names, registered trademarks, trademark applications, registered service marks and service mark applications listed on Schedule 5 attached hereto and made a part hereof, and (i) all extensions, modifications and renewals thereof, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, (iii) the right to sue for past, present and future infringements and dilutions thereof, (iv) the goodwill of each Grantor’s business symbolized by the foregoing, and (v) all of each Grantor’s rights corresponding thereto throughout the world.

(ff) “Trademark Security Agreement” means each Trademark Security Agreement among Grantors, or any of them, and Agent, for the benefit of the Lender Group and the Bank Product Providers, in substantially the form of Exhibit D attached hereto.

(gg) “URL” means “uniform resource locator,” an internet web address.

2. Grant of Security. Each Grantor hereby unconditionally grants, assigns and pledges to Agent (and its agents and designees), for the benefit of the Lender Group and the Bank Product Providers, a continuing security interest in (hereinafter referred to as the “Security Interest”) all of such Grantor’s right, title, and interest in and to the following personal property, whether now owned or hereafter acquired or arising and wherever located (the “Collateral”):

(a) all of such Grantor’s Accounts;

(b) all of such Grantor’s books and records (including all of its Records indicating, summarizing, or evidencing its assets (including the Collateral) or liabilities, all of its Records relating to its business operations or financial condition, and all of its goods or General Intangibles related to such information) (“Books”);

(c) all of such Grantor’s chattel paper (as that term is defined in the Code) and, in any event, including, without limitation, tangible chattel paper and electronic chattel paper (“Chattel Paper”);

(d) all of such Grantor’s interest with respect to any Deposit Account;

(e) all of such Grantor’s Equipment and fixtures;

(f) all of such Grantor’s general intangibles (as that term is defined in the Code) and, in any event, including, without limitation, payment intangibles, contract rights, rights to payment, rights arising under common law, statutes, or regulations, choses or things in action, goodwill (including the goodwill associated with any Trademark, Patent, or Copyright), Patents, Trademarks (provided that no security interest shall be granted in United States intent-to-use trademark applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable federal law), Copyrights, URLs and domain names, industrial designs, other industrial or Intellectual Property or rights therein or applications therefor, whether under license or otherwise, rights in programs, programming materials, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment and other rights under any royalty or licensing agreements, including Intellectual Property Licenses, infringement claims, rights in computer programs, information contained on computer disks or tapes, software, literature, reports, catalogs, pension plan refunds, pension plan refund claims, insurance premium rebates, tax refunds, and tax refund claims, uncertificated securities, and any other personal property other than Commercial Tort Claims, money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment Related Property, Negotiable Collateral, and oil, gas, or other minerals before extraction (“General Intangibles”);

(g) all of such Grantor’s Inventory;

(h) all of such Grantor’s Investment Related Property;

(i) all of such Grantor’s letters of credit, letter of credit rights, instruments, promissory notes, drafts, and documents (as such terms may be defined in the Code) (“Negotiable Collateral”);

(j) all of such Grantor’s rights in respect of supporting obligations (as such term is defined in the Code), including letters of credit and guaranties issued in support of Accounts, Chattel Paper, documents, General Intangibles, instruments, or Investment Related Property (“Supporting Obligations”);

(k) all of such Grantor’s interest with respect to any commercial tort claims (as that term is defined in the Code), including, without limitation those commercial tort claims listed on Schedule 6 attached hereto (“Commercial Tort Claims”);

(l) all of such Grantor’s money, Cash Equivalents, or other assets of such Grantor that now or hereafter come into the possession, custody, or control of Agent (or its agent or designee) or any other member of the Lender Group;

(m) all of the proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance or commercial tort claims covering or relating to any or all of the foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts, Equipment, General Intangibles, Inventory, Investment Related Property, Negotiable Collateral, Supporting Obligations, Commercial Tort Claims, money, or other tangible or intangible property resulting from the sale, lease, license, exchange, collection, or other disposition of any of the foregoing, the proceeds of any award in condemnation with respect to any of the property of Grantors, any rebates or refunds, whether for taxes or otherwise, and all proceeds of any such proceeds, or any portion thereof or interest therein, and the proceeds thereof, and all proceeds of any loss of, damage to, or destruction of the above, whether insured or not insured, and, to the extent not otherwise included, any indemnity, warranty, or guaranty payable by reason of loss or damage to, or otherwise with respect to any of the foregoing Collateral (the “Proceeds”). Without limiting the generality of the foregoing, the term “Proceeds” includes whatever is receivable or received when Investment Related Property or proceeds are sold, exchanged, collected, or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes, without limitation, proceeds of any indemnity or guaranty payable to any Grantor or Agent from time to time with respect to any of the Investment Related Property.

Notwithstanding the foregoing, “Collateral” shall not include (a) any rights or interests in any lease, license, contract, or agreement (including Pledged Operating Agreements and Pledged Partnership Agreements), as such, if under the terms of such lease, license, contract, or agreement (including Pledged Operating Agreements and Pledged Partnership Agreements), or applicable law with respect thereto, the valid grant of a security interest or lien therein to Agent is prohibited and such prohibition has not been or is not waived or the consent of the other party to such lease, license, contract, or agreement (including Pledged Operating Agreements and Pledged Partnership Agreements) has not been or is not otherwise obtained or under applicable law such prohibition cannot be waived; provided, that the foregoing exclusion shall in no way be (i) construed to apply if any such prohibition would be rendered ineffective under the Code or other applicable law (including the Bankruptcy Code) or principles of equity, (ii) construed so as to limit, impair or otherwise affect Agent’s unconditional continuing security interests in and liens upon any rights or interests of Grantors in or to the proceeds thereof, including monies due or to become due under any such lease, license, contract, or agreement (including Pledged Operating Agreements and Pledged Partnership Agreements) (including any Accounts), or (iii) construed to apply at such time as the condition causing such prohibition shall be remedied and, to the extent severable, “Collateral” shall include any portion of such lease, license, contract, or agreement (including Pledged Operating Agreements and Pledged Partnership Agreements) that does not result in such prohibition; or (b) any of the outstanding capital Stock of any Controlled Foreign Corporation in excess of 65% of the voting power of all classes of capital stock of such Controlled Foreign Corporation entitled to vote.

3. Security for Obligations. This Agreement and the Security Interest created hereby secures the payment and performance of all the Secured Obligations, whether now existing or arising hereafter. Without limiting the generality of the foregoing, this Agreement secures the payment of all amounts which constitute part of the Obligations and would be owed by Grantors, or any of them, to Agent, the Lender Group, the Bank Product Providers or any of them, but for the fact that they are unenforceable or not allowable due to the existence of an Insolvency Proceeding involving any Grantor.

4. Grantors Remain Liable. Anything herein to the contrary notwithstanding, (a) each of the Grantors shall remain liable under the contracts and agreements included in the Collateral, including, without limitation, the Pledged Operating Agreements and the Pledged Partnership Agreements, to perform all of the duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by Agent or any other member of the Lender Group of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under such contracts and agreements included in the Collateral until such Grantor no longer has any interest therein, and (c) none of the members of the Lender Group shall have any obligation or liability under such contracts and agreements included in the Collateral by reason of this Agreement, nor shall any of the members of the Lender Group be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. Until an Event of Default shall occur and be continuing, except as otherwise provided in this Agreement, the Credit Agreement, or any other Loan Document, Grantors shall have the right to possession and enjoyment of the Collateral for the purpose of conducting the ordinary course of their respective businesses, subject to and upon the terms hereof and of the Credit Agreement and the other Loan Documents. Without limiting the generality of the foregoing, it is the intention of the parties hereto that record and beneficial ownership of the Pledged Interests, including, without limitation, all voting, consensual, and dividend rights, shall remain with the applicable Grantor until the occurrence of an Event of Default and until Agent shall notify the applicable Grantor of Agent’s exercise of voting, consensual, and/or dividend rights with respect to the Pledged Interests pursuant to Section 15 hereof.

5. Representations and Warranties. Each Grantor hereby represents and warrants as follows:

(a) The exact legal name of each of the Grantors is set forth on the signature pages of this Agreement or a written notice provided to Agent pursuant to Section 6.5 of the Credit Agreement.

(b) Schedule 7 attached hereto sets forth all Real Property owned by Grantors as of the Closing Date.

(c) Such Grantor is the sole legal and beneficial owner, or, to such Grantor’s knowledge, a licensee, of all Intellectual Property owned or purported to be owned by such Grantor or licensed to such Grantor that are material to the conduct of its business. As of the Closing Date, (i) such Grantor has no ownership interest in, or title to, any Copyrights, Patents or Trademarks that are registered or the subject of pending applications for registrations, except as set forth on Schedules 1(a), 3(a) and 5(a), respectively, attached hereto; (ii) such Grantor has no ownership interest in, or title to, any Copyrights, Patents or Trademarks that are material to such Grantor’s business and that are not registered or the subject of pending applications for registrations, except as set forth in Schedules 1(b), 3(b) and 5(b), respectively, attached hereto; and (iii) such Grantor is not a party to any Intellectual Property Licenses that are material to such Grantor’s business, except as set forth on Schedule 2, attached hereto. This Agreement is effective to create a valid and continuing Lien on such Grantor’s Copyrights, Patents and Trademarks, and all of its rights and interests in and to any Intellectual Property Licenses. To the extent that the Security Interest in and to such Grantor’s Patents, Trademarks and Copyrights can be perfected by filing the following documents, upon the filing of the Copyright Security Agreement with the United States Copyright Office and filing of the Patent Security Agreement and the Trademark Security Agreement with the United States Patent and Trademark Office, and the filing of appropriate financing statements in the jurisdictions listed on Schedule 8 hereto, all action necessary to perfect the Security Interest in and to such Grantor’s Patents, Trademarks, and Copyrights, will

have been taken and such perfected Security Interests will be enforceable as such as against any and all creditors of and purchasers from any Grantor.

(d) This Agreement creates a valid security interest in the Collateral of such Grantors, to the extent a security interest therein can be created under the Code, securing the payment and performance of the Secured Obligations. To the extent a security interest in the Collateral can be perfected by the filing of a financing statement under the Code, all filings and other actions necessary to perfect such security interest as of the Closing Date have been duly taken or will have been taken upon the filing of financing statements listing such Grantor, as a debtor, and Agent, as secured party, in the jurisdictions listed next to such Grantor’s name on Schedule 8 attached hereto. Upon the making of such filings, Agent shall have a first priority perfected security interest in the Collateral (subject to Permitted Liens) of such Grantor to the extent such security interest can be perfected by the filing of a financing statement under the Code.

(e) Except for the Security Interest created hereby, (i) subject to Section 6.3 and Section 6.4 of the Credit Agreement, such Grantor is and will at all times be the sole holder of record and the legal and beneficial owner, free and clear of all Liens other than Permitted Liens, of the Pledged Interests indicated on Schedule 4 hereto (as supplemented or modified by any Pledged Interests Addendum or any Supplement to this Agreement) as being owned by such Grantor and, when acquired by such Grantor, any Pledged Interests acquired after the Closing Date; (ii) all of the Pledged Interests are duly authorized, validly issued, fully paid and nonassessable and the Pledged Interests constitute or will constitute the percentage of the issued and outstanding Stock of the Pledged Companies of such Grantor identified on Schedule 4 hereto as supplemented or modified by any Pledged Interests Addendum or any Supplement to this Agreement; (iii) such Grantor has the right and requisite authority to pledge the Investment Related Property constituting Collateral pledged by such Grantor to Agent as provided herein; (iv) all actions necessary to perfect, establish the first priority of (subject to Permitted Liens) Agent’s Liens in the Investment Related Property constituting Collateral, and the proceeds thereof, have been duly taken, (A) upon the execution and delivery of this Agreement, (B) upon the taking of possession by Agent (or its agent or designee) of any certificates constituting the Pledged Interests, to the extent such Pledged Interests are represented by certificates, together with undated powers endorsed in blank by such Grantor, (C) upon the filing of financing statements in the applicable jurisdiction set forth on Schedule 8 attached hereto for such Grantor with respect to the Pledged Interests of such Grantor that are not represented by certificates, and (D) with respect to any Securities Accounts, upon the delivery of Control Agreements with respect thereto; and (v) such Grantor has delivered to and deposited with Agent (or, with respect to any Pledged Interests created after the Closing Date, will deliver and deposit in accordance with Sections 6(a) and 8 hereof) all certificates representing the Pledged Interests owned by such Grantor to the extent such Pledged Interests constitute Collateral and are represented by certificates, and undated powers endorsed in blank with respect to such certificates.

(f) No consent, approval, authorization, or other order or other action by, and no notice to or filing with, any Governmental Authority or any other Person is required (i) for the grant of a Security Interest by such Grantor in and to the Collateral pursuant to this Agreement or for the execution, delivery, or performance of this Agreement by such Grantor, or (ii) for the exercise by Agent of the voting or other rights provided for in this Agreement with respect to the Investment Related Property constituting Collateral or the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with such disposition of Investment Related Property by laws affecting the offering and sale of securities generally.

(g) [intentionally omitted]

(h) Such Grantor has made in good faith and in accordance with the procedures and regulations of the United States Copyright Office and the United States Patent and Trademark Office, as applicable, all payments, filings and recordations necessary to protect and maintain its interest in the Copyrights, Patents and Trademarks utilized and identified on Schedules 1(a), 3(a) and 5(a) in the United States in a manner sufficient to claim in the public record such Grantor’s ownership thereof, including (i) making all necessary registration, maintenance, and renewal fee payments; and (ii) filing all necessary

documents, including all applications for registration of such Copyrights, Patents and Trademarks, in each case, except to the extent the failure to do so could not reasonably be expected to have a Material Adverse Change.

(i) [intentionally omitted]

(j) [intentionally omitted]

(k) No claim has been made in writing and is continuing or, to such Grantor’s knowledge, threatened in any written communication directed toward any Grantor that the use by such Grantor of any Intellectual Property does or may violate the Intellectual Property of any Person, except to the extent the same could not reasonably be expected to have a Material Adverse Change. To such Grantor’s knowledge, there is currently no infringement or unauthorized use of any item of Intellectual Property contained on Schedules 1, 3 or 5, except to the extent the same could not reasonably be expected to have a Material Adverse Change.

6. Covenants. Each Grantor, jointly and severally, covenants and agrees with Agent and the Lender Group that from and after the date of this Agreement and until the date of termination of this Agreement in accordance with Section 22 hereof:

(a) Possession or Control of Collateral. In the event that any Collateral, including Proceeds, is evidenced by or consists of Negotiable Collateral, Investment Related Property, Chattel Paper, or Deposit Accounts, and if and to the extent that perfection or priority of Agent’s Security Interest is dependent on possession or control, such Grantor, immediately upon the request of Agent and in accordance with Section 8 hereof, shall execute such other documents and instruments as shall be reasonably requested by Agent or endorse and deliver physical possession of such Negotiable Collateral, Investment Related Property, or Chattel Paper, together with such undated powers endorsed in blank as shall be requested by Agent (or its agent or designee), or grant control of such Deposit Account, as applicable, to Agent (or its agent or designee). Such Grantor hereby acknowledges and agrees that any such agent or designee of Agent shall be deemed to be a “secured party” with respect to such Collateral for all purposes.

(b) Chattel Paper.

(i) Such Grantor shall take all commercially reasonable steps necessary to grant Agent control of all electronic Chattel Paper in accordance with the Code and all “transferable records” as that term is defined in Section 16 of the Uniform Electronic Transaction Act and Section 201 of the federal Electronic Signatures in Global and National Commerce Act as in effect in any relevant jurisdiction;

(ii) If such Grantor retains possession of any Chattel Paper or instruments (which retention of possession shall be subject to the extent permitted hereby and by the Credit Agreement), promptly upon the request of Agent, such Chattel Paper and instruments shall be marked with the following legend: “This writing and the obligations evidenced or secured hereby are subject to the Security Interest of Wells Fargo Foothill, Inc., as Agent for the benefit of the Lender Group and the Bank Product Providers, pursuant to the Security Agreement dated as of November 30, 2004”.

(i) Except to the extent otherwise permitted by the Credit Agreement, such Grantor shall obtain an authenticated Control Agreement from each bank holding a Deposit Account for such Grantor.

(ii) Except to the extent otherwise permitted by the Credit Agreement, such Grantor shall obtain authenticated Control Agreements from each issuer of uncertificated securities, securities

intermediary, or commodities intermediary issuing or holding any financial assets or commodities to or for any Grantor.

(d) Letter of Credit Rights. If such Grantor is or becomes the beneficiary of a letter of credit with a value in excess of $100,000, such Grantor shall (i) if the value is in excess of $1,000,000, promptly (and in any event within 10 Business Days after becoming a beneficiary) and (ii) if the value is not in excess of $1,000,000, simultaneously with the delivery of quarterly financial statements required pursuant to Section 5.3 of the Credit Agreement, notify Agent thereof and, upon the request by Agent, enter into a tri-party agreement with Agent and the issuer and/or confirmation bank with respect to letter-of-credit rights (as that term is defined in the Code) assigning such letter-of-credit rights to Agent and directing all payments thereunder to Agent’s Account, all in form and substance reasonably satisfactory to Agent.

(e) Commercial Tort Claims. Such Grantor shall (i) if the value is in excess of $1,000,000, promptly (and in any event within 10 Business Days thereafter) and (ii) if the value is not in excess of $1,000,000, simultaneously with the delivery of quarterly financial statements required pursuant to Section 5.3 of the Credit Agreement, notify Agent in writing upon incurring or otherwise obtaining a Commercial Tort Claim with a value in excess of $100,000 after the date hereof against any third party and, upon request of Agent, promptly amend Schedule 6 to this Agreement, authorize the filing of additional financing statements or amendments to existing financing statements and do such other acts or things deemed necessary by Agent to give Agent a first priority, perfected security interest (subject to Permitted Liens) in any such Commercial Tort Claim.

(f) [intentionally omitted].

(g) Intellectual Property.

(i) Upon the reasonable written request of Agent, in order to facilitate filings with the United States Patent and Trademark Office and the United States Copyright Office, such Grantor shall execute and deliver to Agent one or more Copyright Security Agreements, Trademark Security Agreements, and/or Patent Security Agreements to evidence Agent’s Lien on such Grantor’s Patents, Trademarks, and/or Copyrights, and the General Intangibles of such Grantor relating thereto or represented thereby.

(ii) Such Grantor shall have the duty, to the extent material to the operation of such Grantor’s business, (A) to reasonably investigate any third party infringement, or misappropriation of any Intellectual Property within a reasonable amount of time after such Grantor becomes aware of such infringement or misappropriation and, if determined by such Grantor to be reasonably necessary to protect such Grantor’s rights in such Intellectual Property, take appropriate reasonable action to abate such infringement or misappropriation, (B) to prosecute diligently any trademark application or service mark application that is part of the Trademarks pending as of the date hereof or hereafter until the termination of this Agreement (other than applications that are deemed by such Grantor in its reasonable business judgment to no longer be necessary to the conduct of such Grantor’s business), (C) to prosecute diligently any patent application that is part of the Patents pending as of the date hereof or hereafter until the termination of this Agreement (other than applications that are deemed by such Grantor in its reasonable business judgment to no longer be necessary to the conduct of such Grantor’s business), and (D) to take reasonable and necessary action to preserve and maintain all of such Grantor’s Trademarks, Patents, Copyrights, Intellectual Property Licenses, and its rights therein, including the filing of applications for renewal, affidavits of use, and affidavits of incontestability. Any expenses incurred in connection with the foregoing shall be borne by the appropriate Grantor (other than Trademarks, Patents, Copyrights or Intellectual Property Licenses that are deemed by such Grantor in its reasonable business judgment to be no longer necessary in the conduct of such Grantor’s business). Such Grantor further agrees not to abandon any Trademark, Patent, Copyright, or Intellectual Property License that is material to the operation of such Grantor’s business without the prior written consent of Agent.

(iii) Such Grantor acknowledges and agrees that the Lender Group shall have no duties with respect to the Trademarks, Patents, Copyrights, or Intellectual Property Licenses. Without limiting the generality of this Section 6(g), such Grantor acknowledges and agrees that no member of the Lender Group shall be under any obligation to take any steps necessary to preserve rights in the Trademarks, Patents, Copyrights, or Intellectual Property Licenses against any other Person, but Agent may do so at its option from and after the occurrence and during the continuance of an Event of Default and all expenses incurred by Agent and Lenders in connection therewith (including, without limitation, reasonable fees and expenses of attorneys and other professionals), to the extent required to be paid under the Credit Agreement, shall be for the sole account of Borrowers and shall be chargeable to the Loan Account.

(iv) With respect to the Intellectual Property that a Grantor determines, in its reasonable business judgment, is material to the conduct of Grantor’s business, such Grantor agrees to take such steps as are reasonably necessary, including making all necessary payments and filings in connection with registration, maintenance, and renewal of Copyrights, Trademarks and Patents in the United States Copyright Office, the United States Patent and Trademark Office, any other relevant government agencies in foreign jurisdictions that Grantor in its reasonable business judgment deems material to its business, to maintain each such Intellectual Property. Such Grantor hereby agrees to take corresponding steps with respect to each new or acquired Intellectual Property to which it or any of its Subsidiaries is now or later becomes the sole owner or licensee of all rights, title and interest that such Grantor determines, in its reasonable business judgment, are material to the conduct of its businesses. Any expenses incurred in connection with such activities shall be borne solely by such Grantor.

(v) On each date on which the Compliance Certificate is delivered by Administrative Borrower pursuant to Section 5.3 of the Credit Agreement, such Grantor shall provide Agent with a written report of all new Copyrights, Patents and Trademarks that are registered or the subject of pending applications for registrations, which were acquired or filed by such Grantor during the prior period. In the case of such registrations or applications therefor which were acquired by such Grantor, such Grantor shall file the necessary documents with the appropriate filing office identifying such Grantor as the owner thereof. In each of the foregoing cases, such Grantor shall cause to be prepared, executed, and delivered to Agent supplemental schedules to the applicable Loan Documents to identify such Copyright, Patent and Trademark registrations and applications therefor as being subject to the security interests created thereunder.

(vi) Upon such a Grantor’s receipt from the United States Copyright Office of written notice of registration of any Copyright(s), such Grantor shall promptly (but in no event later than 30 days following such receipt) notify Agent of such registration by delivering, or causing to be delivered to Agent, via overnight courier, electronic mail or telefacsimile at the addresses designated in the Credit Agreement, documentation reasonably sufficient for Agent to perfect Agent’s Liens on such Copyright(s).

(h) Investment Related Property.

(i) Subject to Section 5.16 of the Credit Agreement, if such Grantor shall receive or become entitled to receive any Pledged Interests after the Closing Date, it shall (i) if the value is in excess of $1,000,000, promptly (and in any event within 10 Business Days thereafter) and (ii) if the value is not in excess of $1,000,000, simultaneously with the delivery of quarterly financial statements required pursuant to Section 5.3 of the Credit Agreement, deliver to Agent a duly executed Pledged Interests Addendum identifying such Pledged Interests.

(ii) All sums of money and property paid or distributed in respect of the Investment Related Property which are received by such Grantor shall be held by such Grantor in trust for the benefit of Agent segregated from such Grantor’s other property.

(iii) Such Grantor shall promptly deliver to Agent a copy of each material notice or other material communication received by it in respect of any Pledged Interests.

(iv) After an Event of Default has occurred and is continuing, such Grantor agrees that it will cooperate with Agent in obtaining all necessary approvals and making all necessary filings under federal, state, local, or foreign law in connection with the Security Interest on the Investment Related Property or any sale or transfer thereof.

(v) As to all limited liability company or partnership interests issued under any Pledged Operating Agreement or Pledged Partnership Agreement, such Grantor hereby represents, warrants and covenants that the Pledged Interests issued pursuant to any such agreement (A) are not and shall not be dealt in or traded on securities exchanges or in securities markets, (B) do not and will not constitute investment company securities, and (C) are not and will not be held by such Pledgor in a securities account.

(i) [intentionally omitted].

(j) Transfers and Other Liens. Such Grantor shall not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral, except as expressly permitted by the Credit Agreement, or (ii) create or permit to exist any Lien upon or with respect to any of its Collateral, except for Permitted Liens. The inclusion of Proceeds in the Collateral shall not be deemed to constitute Agent’s consent to any sale or other disposition of any of the Collateral except as expressly permitted in this Agreement or the other Loan Documents.

(k) Other Actions as to Any and All Collateral. Subject to Section 5.16 of the Credit Agreement, such Grantor shall (i) if the value is in excess of $1,000,000, promptly (and in any event within 10 Business Days thereafter) and (ii) if the value is not in excess of $1,000,000, simultaneously with the delivery of quarterly financial statements required pursuant to Section 5.3 of the Credit Agreement, notify Agent in writing upon (i) acquiring or otherwise obtaining any Collateral (other than Intellectual Property, which are governed by Sections 6(g)(v)) after the date hereof consisting of Investment Related Property, Chattel Paper (electronic, tangible or otherwise), documents (as defined in the Code), promissory notes (as defined in the Code), or instruments (as defined in the Code) or (ii) any amount payable under or in connection with any of the Collateral being or becoming evidenced after the date hereof by any Chattel Paper, documents, promissory notes or instruments, and, upon the request of Agent and in accordance with Section 8 hereof, promptly execute such other documents and instruments, or if applicable, deliver such Chattel Paper, documents, promissory notes, instruments, or certificates evidencing any Investment Related Property in accordance with Section 6 hereof and do such other acts or things deemed necessary by Agent to protect Agent’s Security Interest therein.

7. Relation to Other Security Documents. The provisions of this Agreement shall be read and construed with the other Loan Documents referred to below in the manner so indicated.

(a) Credit Agreement. In the event of any conflict between any provision in this Agreement and a provision in the Credit Agreement, such provision of the Credit Agreement shall control.

(b) Patent, Trademark, Copyright Security Agreements. The provisions of the Copyright Security Agreements, Trademark Security Agreements, and Patent Security Agreements are supplemental to the provisions of this Agreement, and nothing contained in the Copyright Security Agreements, Trademark Security Agreements, or the Patent Security Agreements shall limit any of the rights or remedies of Agent hereunder.

8. Further Assurances.

(a) Each Grantor agrees that from time to time, at its own expense, such Grantor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that Agent may reasonably request, in order to perfect and protect any Security Interest granted or purported to be granted hereby or to enable Agent to exercise and enforce its rights and remedies hereunder with respect to any of the Collateral.

(b) Each Grantor hereby authorizes the filing of such financing or continuation statements, or amendments thereto, and such Grantor will execute and deliver to Agent such other instruments or notices, as may be necessary or as Agent may reasonably request, in order to perfect and preserve the Security Interest granted or purported to be granted hereby.

(c) Each Grantor hereby authorizes Agent to file, transmit, or communicate, as applicable, financing statements and amendments describing the Collateral as “all personal property of debtor” or “all assets of debtor” or words of similar effect, in order to perfect Agent’s security interest in the Collateral without such Grantor’s signature.

(d) Each Grantor acknowledges that, prior to the termination of this Agreement, it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement filed in connection with this Agreement without the prior written consent of Agent, subject to such Grantor’s rights under Section 9-509(d)(2) of the Code.

9. Agent’s Right to Perform Contracts. Upon the occurrence and during the continuance of an Event of Default, Agent (or its designee) may proceed to perform any and all of the obligations of any Grantor contained in any contract, lease, or other agreement and exercise any and all rights of any Grantor therein contained as fully as such Grantor itself could, subject to the terms of such contract, lease or other agreement.

10. Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints Agent its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, at such time as an Event of Default has occurred and is continuing under the Credit Agreement, to take any action and to execute any instrument which Agent may reasonably deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:

(a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in connection with the Accounts or any other Collateral of such Grantor;

(b) to receive and open all mail addressed to such Grantor and to notify postal authorities to change the address for the delivery of mail to such Grantor to that of Agent;

(d) to file any claims or take any action or institute any proceedings which Agent may deem necessary or desirable for the collection of any of the Collateral of such Grantor or otherwise to enforce the rights of Agent with respect to any of the Collateral;

(e) to repair, alter, or supply goods, if any, necessary to fulfill in whole or in part the purchase order of any Person obligated to such Grantor in respect of any Account of such Grantor;

(f) to use any labels, Patents, Trademarks, trade names, URLs, domain names, industrial designs, Copyrights, advertising matter or other industrial or intellectual property rights, in advertising for sale

and selling Inventory and other Collateral and to collect any amounts due under Accounts, contracts or Negotiable Collateral of such Grantor; and

(g) Agent, on behalf of the Lender Group and the Bank Product Providers, shall have the right, but shall not be obligated, to bring suit in its own name to enforce the Trademarks, Patents, Copyrights and Intellectual Property Licenses and, if Agent shall commence any such suit, the appropriate Grantor shall, at the request of Agent, do any and all lawful acts and execute any and all proper documents reasonably required by Agent in aid of such enforcement.

To the extent permitted by law, each Grantor hereby ratifies all that such attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable until this Agreement is terminated.

11. Agent May Perform. If any Grantor fails to perform any agreement contained herein, Agent may itself perform, or cause performance of, such agreement, and the reasonable expenses of Agent incurred in connection therewith shall be payable, jointly and severally, by Grantors.

12. Agent’s Duties. The powers conferred on Agent hereunder are solely to protect Agent’s interest in the Collateral, for the benefit of the Lender Group and the Bank Product Providers, and shall not impose any duty upon Agent to exercise any such powers. Except for the safe custody of any Collateral in its actual possession and the accounting for moneys actually received by it hereunder, Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its actual possession if such Collateral is accorded treatment substantially equal to that which Agent accords its own property.

13. Collection of Accounts, General Intangibles and Negotiable Collateral. At any time upon the occurrence and during the continuation of an Event of Default, Agent or Agent’s designee may (a) notify Account Debtors of any Grantor that such Grantor’s Accounts, General Intangibles, Chattel Paper or Negotiable Collateral have been assigned to Agent, for the benefit of the Lender Group and the Bank Product Providers, or that Agent has a security interest therein, and (b) collect such Grantor’s Accounts, General Intangibles and Negotiable Collateral directly, and any collection costs and expenses shall constitute part of such Grantor’s Secured Obligations under the Loan Documents.

14. Disposition of Pledged Interests by Agent. None of the Pledged Interests existing as of the date of this Agreement are, and none of the Pledged Interests hereafter acquired on the date of acquisition thereof will be, registered or qualified under the various federal or state securities laws of the United States and disposition thereof after an Event of Default may be restricted to one or more private (instead of public) sales in view of the lack of such registration. Each Grantor understands that in connection with such disposition, Agent may approach only a restricted number of potential purchasers and further understands that a sale under such circumstances may yield a lower price for the Pledged Interests than if the Pledged Interests were registered and qualified pursuant to federal and state securities laws and sold on the open market. Each Grantor, therefore, agrees that: (a) if Agent shall, pursuant to the terms of this Agreement, sell or cause the Pledged Interests or any portion thereof to be sold at a private sale, Agent shall have the right to rely upon the advice and opinion of any nationally recognized brokerage or investment firm (but shall not be obligated to seek such advice and the failure to do so shall not be considered in determining the commercial reasonableness of such action) as to the best manner in which to offer the Pledged Interest for sale and as to the best price reasonably obtainable at the private sale thereof; and (b) such reliance shall be conclusive evidence that Agent has handled the disposition in a commercially reasonable manner.

15. Voting Rights.

(a) Upon the occurrence and during the continuation of an Event of Default, (i) Agent may, at its option, and with prior notice (unless such Event of Default is an Event of Default specified in Section 7.4 or 7.5 of the Credit Agreement, in which case no such notice need be given) to each Grantor, and in addition to all rights and remedies available to Agent under any other agreement, at law, in equity, or otherwise, exercise all voting rights, and all other ownership or consensual rights in respect of the Pledged Interests owned by such Grantor, but under no circumstances is Agent obligated by the terms of this Agreement to exercise such rights, and (ii) if Agent duly exercises its right to vote any of such Pledged Interests, each Grantor hereby appoints Agent such Grantor’s true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged Interests in any manner Agent deems advisable for or against all matters submitted or which may be submitted to a vote of shareholders, partners or members, as the case may be. The power-of-attorney granted hereby is coupled with an interest and shall be irrevocable.

(b) For so long as any Grantor shall have the right to vote the Pledged Interests owned by it, such Grantor covenants and agrees that it will not, without the prior written consent of Agent, vote or take any consensual action with respect to such Pledged Interests which would materially and adversely affect the rights of Agent and the other members of the Lender Group or that would result in any violation of any provision of the Credit Agreement or any other Loan Document.

16. Remedies. Upon the occurrence and during the continuance of an Event of Default:

(a) Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein, in the other Loan Documents, or otherwise available to it, all the rights and remedies of a secured party on default under the Code or any other applicable law. Without limiting the generality of the foregoing, each Grantor expressly agrees that, in any such event, Agent, without demand of performance or other demand, advertisement or notice of any kind (except a notice specified below of time and place of public or private sale) to or upon any of Grantors or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the Code or any other applicable law), may take immediate possession of all or any portion of the Collateral and (i) require Grantors to, and each Grantor hereby agrees that it will at its own expense and upon request of Agent forthwith, assemble all or part of the Collateral as directed by Agent and make it available to Agent at one or more locations where such Grantor regularly maintains Inventory, and (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of Agent’s offices or elsewhere, for cash, on credit, and upon such other terms as Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least 10 days notice (or such longer notice period as may be required by law) to any of Grantors of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification and specifically such notice shall constitute a reasonable “authenticated notification of disposition” within the meaning of Section 9-611 of the Code. Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

(b) Agent is hereby granted a non-exclusive license or other right to use, without liability for royalties or any other charge, each Grantor’s labels, Patents, Copyrights, rights of use of any name, trade secrets, trade names, Trademarks, service marks and advertising matter, URLs, domain names, industrial designs, other industrial or intellectual property or any property of a similar nature, whether owned or licensable by any Grantor or with respect to which any Grantor has sublicensable rights under license, sublicense, or other agreements, as it pertains to the Collateral, in preparing for sale, advertising for sale and selling any Collateral, and each Grantor’s rights under all licenses and all franchise agreements shall inure to the benefit of Agent; provided, however, that Agent may exercise the foregoing only upon the occurrence and during the continuance of an Event of Default.

(c) Any cash held by Agent as Collateral and all cash proceeds received by Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied against the Secured Obligations in the order set forth in the Credit Agreement. In the event the proceeds of Collateral are insufficient to satisfy all of the Secured Obligations in full, each Grantor shall remain jointly and severally liable for any such deficiency.

(d) Agent shall have the right to seek the appointment of a receiver for the properties and assets of each Grantor and hereby waives the right to have a bond or other security posted by Agent.

17. Remedies Cumulative. Each right, power, and remedy of Agent as provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power, or remedy provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by Agent, of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise by Agent of any or all such other rights, powers, or remedies.

18. Marshaling. Agent shall not be required to marshal any present or future collateral security (including but not limited to the Collateral) for, or other assurances of payment of, the Secured Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of its rights and remedies hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising. To the extent that it lawfully may, each Grantor hereby agrees that it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of Agent’s rights and remedies under this Agreement or under any other instrument creating or evidencing any of the Secured Obligations or under which any of the Secured Obligations is outstanding or by which any of the Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.

19. Indemnity and Expenses.

(a) Each Grantor agrees to indemnify, defend and hold harmless Agent and the other members of the Lender Group to the same extent and in the same manner as the indemnity made by the Borrowers pursuant to Section 10.3 of the Credit Agreement. This provision shall survive the termination of this Agreement and the Credit Agreement and the repayment of the Secured Obligations.

(b) Grantors, jointly and severally, shall, upon demand, pay to Agent (or Agent, may charge to the Loan Account) all the Lender Group Expenses which Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or, upon an Event of Default, the sale of, collection from, or other realization upon, any of the Collateral in accordance with this Agreement and the other Loan Documents, (iii) the exercise or enforcement of any of the rights of Agent hereunder or (iv) the failure by any of Grantors to perform or observe any of the provisions hereof.

20. Merger, Amendments; Etc. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No waiver of any provision of this Agreement, and no consent to any departure by any of Grantors herefrom, shall in any event be effective unless the same shall be in writing and signed by Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment of any provision of this Agreement shall be effective unless the same shall be in writing and signed by Agent and each of Grantors to which such amendment applies.

21. Addresses for Notices. All notices and other communications provided for hereunder shall be given in the form, manner and delivered to Agent at its address specified in the Credit Agreement, and to any of the Grantors at their respective addresses specified in the Credit Agreement or Guaranty, as applicable, or, as to any party, at such other address as shall be designated by such party in a written notice to the other party.

22. Continuing Security Interest; Assignments under Credit Agreement. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the Obligations have been paid in full in cash in accordance with the provisions of the Credit Agreement and the Commitments have expired or have been terminated, (b) be binding upon each Grantor, and their respective successors and assigns, and (c) inure to the benefit of, and be enforceable by, Agent, and its successors, permitted transferees and permitted assigns. Without limiting the generality of the foregoing clause (c), any Lender may, in accordance with the provisions of the Credit Agreement, assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise. Upon payment in full in cash of the Obligations in accordance with the provisions of the Credit Agreement and the expiration or termination of the Commitments, the Security Interest granted hereby shall terminate and this Agreement and all rights to the Collateral shall revert to Grantors or any other Person entitled thereto. At such time, Agent will file, or authorize the filing of, appropriate termination statements to terminate such Security Interests, will return any Collateral in its possession to the applicable Grantor (or its designee) and will execute any documents and take such commercially reasonable actions as are reasonably requested by any Grantor to evidence such termination and release. No transfer or renewal, extension, assignment, or termination of this Agreement or of the Credit Agreement, any other Loan Document, or any other instrument or document executed and delivered by any Grantor to Agent nor any additional Advances or other loans made by any Lender to Borrowers, nor the taking of further security, nor the retaking or re-delivery of the Collateral to Grantors, or any of them, by Agent, nor any other act of the Lender Group or the Bank Product Providers, or any of them, shall release any Grantor from any obligation, except a release or discharge executed in writing by Agent in accordance with the provisions of the Credit Agreement. Agent shall not by any act, delay, omission or otherwise, be deemed to have waived any of its rights or remedies hereunder, unless such waiver is in writing and signed by Agent and then only to the extent therein set forth. A waiver by Agent of any right or remedy on any occasion shall not be construed as a bar to the exercise of any such right or remedy which Agent would otherwise have had on any other occasion.

23. Governing Law.

(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH GRANTOR AND EACH MEMBER OF THE LENDER GROUP AND EACH BANK PRODUCT PROVIDER WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE

DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 23.

(c) EACH GRANTOR AND EACH MEMBER OF THE LENDER GROUP AND EACH BANK PRODUCT PROVIDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH GRANTOR AND EACH MEMBER OF THE LENDER GROUP AND EACH BANK PRODUCT PROVIDER REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

24. New Subsidiaries. To the extent required by Section 5.16 of the Credit Agreement, any new direct or indirect Subsidiary (whether by acquisition or creation) of Borrowers or any other Grantor is required to enter into this Agreement by executing and delivering in favor of Agent a supplement to this Security Agreement in the form of Annex 1 attached hereto. Upon the execution and delivery of such supplement by such new Subsidiary, such Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of any instrument adding an additional Grantor as a party to this Agreement shall not require the consent of any Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor hereunder.

25. Agent. Each reference herein to any right granted to, benefit conferred upon or power exercisable by the “Agent” shall be a reference to Agent, for the benefit of the Lender Group and the Bank Product Providers.

26. Miscellaneous.

(a) This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis.

(b) Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.

(c) Headings used in this Agreement are for convenience only and shall not be used in connection with the interpretation of any provision hereof.

(d) The pronouns used herein shall include, when appropriate, either gender and both singular and plural, and the grammatical construction of sentences shall conform thereto.

[SIGNATURE PAGES TO FOLLOW]

IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by and through their duly authorized officers, as of the day and year first above written.

GRANTORS:	ALTRA INDUSTRIAL MOTION, INC., a Delaware corporation, as a Grantor, WARNER ELECTRIC LLC, a Delaware limited liability company, as a Grantor, KILIAN MANUFACTURING CORPORATION, a Delaware corporation, as a Grantor, WARNER ELECTRIC TECHNOLOGY LLC, a Delaware limited liability company, as a Grantor, FORMSPRAG LLC, a Delaware limited liability company, as a Grantor, BOSTON GEAR LLC, a Delaware limited liability company, as a Grantor, NUTTALL GEAR L L C, a Delaware limited liability company, as a Grantor, THE KILIAN COMPANY, a Delaware corporation, as a Grantor, WARNER ELECTRIC INTERNATIONAL HOLDING, INC., a Delaware corporation, as a Grantor, AMERICAN ENTERPRISES MPT CORP., a Delaware corporation, as a Grantor, and


	By:
	Name:	Michael L. Hurt
	Title:	Chief Executive Officer

[SIGNATURE PAGE OF WFF SECURITY AGREEMENT]

	AMERIDRIVES INTERNATIONAL, L.P., a Delaware limited partnership, as a Grantor

	By: American Enterprises MPT Corp., its general partner

		By:
		Name: Michael L. Hurt
		Title: Chief Executive Officer


	AMERICAN ENTERPRISES MPT HOLDINGS, L.P.,
	a Delaware limited partnership, as a Grantor

	By: Altra Industrial Motion, Inc., its general partner

		By:
		Name: Michael L. Hurt
		Title: Chief Executive Officer

AGENT:	WELLS FARGO FOOTHILL, INC.,
	a California corporation, as Agent


	By:
	Name:
	Title:

[SIGNATURE PAGE OF WFF SECURITY AGREEMENT]

SCHEDULE 1

COPYRIGHTS

Schedule 1(a)

Grantor	Country	Copyright	Registration No.	Registration Date

Schedule 1(b)

SCHEDULE 2

INTELLECTUAL PROPERTY LICENSES

SCHEDULE 3

PATENTS

Schedule 3(a)

Grantor	Country	Patent	Registration No.	Registration Date

Schedule 3(b)

SCHEDULE 4

PLEDGED COMPANIES

Name of Pledgor	Name of Pledged Company	Number of Shares/Units	Class of Interests	Percentage of Class Owned	Certificate Nos.

SCHEDULE 5

TRADEMARKS

Schedule 5(a)

Grantor	Country	Mark	Application/ Registration No.	App/Reg Date

Schedule 5(b)

SCHEDULE 6

COMMERCIAL TORT CLAIMS

[include specific case caption or descriptions per Official Code Comment 5 to Section 9-108 of the Code]

SCHEDULE 7

OWNED REAL PROPERTY

SCHEDULE 8

LIST OF UNIFORM COMMERCIAL CODE FILING JURISDICTIONS

Grantor		Jurisdictions

ANNEX 1 TO SECURITY AGREEMENT
FORM OF SUPPLEMENT

Supplement No. (this “Supplement”) dated as of , 200 , to the Security Agreement dated as of November 30, 2004 (as amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”) by each of the parties listed as “Grantors” on the signature pages thereto and those additional entities that thereafter become grantors thereunder (collectively, jointly and severally, “Grantors” and each individually “Grantor”), and WELLS FARGO FOOTHILL, INC., in its capacity as Agent for the Lender Group and the Bank Product Providers (together with its successors and assigns in such capacity, “Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement dated of November 30, 2004 (as amended, restated, supplemented or otherwise modified from time to time, including all exhibits and schedules thereto, the “Credit Agreement”) among Altra Industrial Motion, Inc., a Delaware corporation (“Parent”), each of its Subsidiaries identified on the signature pages thereof (Parent and such Subsidiaries, “Borrowers”), the lenders party thereto as “Lenders” (“Lenders”), and Agent, the Lender Group agreed to make certain financial accommodations available to Borrowers from time to time pursuant to the terms and conditions thereof;

WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement and/or the Credit Agreement;

WHEREAS, Grantors have entered into the Security Agreement in order to induce the Lender Group to make certain financial accommodations to Borrowers; and

WHEREAS, pursuant to Section 5.16 of the Credit Agreement, new direct or indirect Restricted Subsidiaries of Borrowers and the other Grantors, must execute and deliver to Agent certain Loan Documents, including the Security Agreement, and the execution of the Security Agreement by the undersigned new Grantor or Grantors (collectively, the “New Grantors”) may be accomplished by the execution of this Supplement in favor of Agent, for the benefit of the Lender Group and the Bank Product Providers.

NOW, THEREFORE, for and in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each New Grantor hereby agrees as follows:

1. In accordance with Section 24 of the Security Agreement, each New Grantor, by its signature below, becomes a “Grantor” under the Security Agreement with the same force and effect as if originally named therein as a “Grantor” and each New Grantor hereby (a) agrees to all of the terms and provisions of the Security Agreement applicable to it as a “Grantor” thereunder and (b) represents and warrants that the representations and warranties made by it as a “Grantor” thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, each New Grantor, as security for the payment and performance in full of the Secured Obligations, does hereby grant, assign, and pledge to Agent, for the benefit of the Lender Group and the Bank Product Providers, a security interest in and security title to the assets of such New Grantor of the type described in Section 2 of the Security Agreement to secure the full and prompt payment of the Secured Obligations, including, without limitation, any interest thereon, plus reasonable attorneys’ fees and expenses if the Secured Obligations represented by the Security Agreement are collected by law, through an attorney-at-law, or under advice therefrom to the extent such fees and expenses are required to be paid by the Borrowers under the Credit Agreement. Schedule 1, “Copyrights,” Schedule 2, “Intellectual Property Licenses,” Schedule 3, “Patents,” Schedule 4, “Pledged Companies,” Schedule 5, “Trademarks,” Schedule 6, “Commercial Tort Claims,” Schedule 7, “Owned Real Property,” and Schedule 8, “List of Uniform Commercial Code Filing Jurisdictions,” attached hereto supplement Schedule 1, Schedule 2, Schedule 3, Schedule 4, Schedule 5, Schedule 6, Schedule 7, and Schedule 8, respectively, to the Security Agreement and shall be deemed a part thereof for all purposes of the Security Agreement. Each reference to a “Grantor” in the Security

Agreement shall be deemed to include each New Grantor. The Security Agreement is incorporated herein by reference.

2. Each New Grantor represents and warrants to Agent, the Lender Group and the Bank Product Providers that this Supplement has been duly executed and delivered by such New Grantor and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as enforceability thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws affecting creditors’ rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

3. This Supplement may be executed in multiple counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Delivery of a counterpart hereof by facsimile transmission or by e-mail transmission shall be as effective as delivery of a manually executed counterpart hereof.

4. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect.

5. This Supplement shall be construed in accordance with and governed by the laws of the State of New York, without regard to the conflict of laws principles thereof.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, each New Grantor and Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written.

NEW GRANTORS:		[Name of New Grantor]


		By:
		Name:
		Title:

		[Name of New Grantor]


		By:
		Name:
		Title:

AGENT:		WELLS FARGO FOOTHILL, INC.,
		a California corporation, as Agent


		By:
		Name:
		Title:

SIGNATURE PAGE OF SUPPLEMENT TO SECURITY AGREEMENT

EXHIBIT A

FORM OF COPYRIGHT SECURITY AGREEMENT

This COPYRIGHT SECURITY AGREEMENT (this “Copyright Security Agreement”) is made this day of , 2004, among Grantors listed on the signature pages hereof (collectively, jointly and severally, “Grantors” and each individually “Grantor”), and WELLS FARGO FOOTHILL, INC., in its capacity as Agent for the Lender Group and the Bank Product Providers (together with its successors and assigns in such capacity, the “Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement dated of November 30, 2004 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, including all exhibits and schedules thereto, the “Credit Agreement”) among Altra Industrial Motion, Inc., a Delaware corporation (“Parent”), each of Parent’s Subsidiaries identified on the signature pages thereof (Parent and such Subsidiaries, “Borrowers”), the lenders party thereto as “Lenders” (“Lenders”), and Agent, the Lender Group agreed to make certain financial accommodations available to Borrowers from time to time pursuant to the terms and conditions thereof;

WHEREAS, the members of the Lender Group are willing to make the financial accommodations to Borrowers as provided for in the Credit Agreement, but only upon the condition, among others, that Grantors shall have executed and delivered to Agent, for the benefit of the Lender Group and the Bank Product Providers, that certain Security Agreement dated as of November 30, 2004 (including all annexes, exhibits or schedules thereto, as from time to time amended, restated, amended and restated, supplemented or otherwise modified, the “Security Agreement”); and

WHEREAS, pursuant to the Security Agreement, Grantors are required to execute and deliver to Agent, for the benefit of the Lender Group and the Bank Product Providers, this Copyright Security Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantors hereby agree as follows:

1. DEFINED TERMS. All capitalized terms used but not otherwise defined herein have the meanings given to them in the Security Agreement and/or the Credit Agreement.

2. GRANT OF SECURITY INTEREST IN COPYRIGHT COLLATERAL. Each Grantor hereby grants to Agent, for the benefit of the Lender Group and the Bank Product Providers, a continuing first priority security interest (subject to Permitted Liens) in all of such Grantor’s right, title and interest in, to and under the following, whether presently existing or hereafter created or acquired (collectively, the “Copyright Collateral”):

(a) all of such Grantor’s Copyrights and rights in or to Copyright Intellectual Property Licenses to which it is a party including those referred to on Schedule I hereto;

(b) all restorations, reversions, renewals or extensions of the foregoing; and

(c) all products and proceeds of the foregoing, including, without limitation, any claim by such Grantor against third parties for past, present or future infringement of any Copyright.

3. SECURITY AGREEMENT. The security interests granted pursuant to this Copyright Security Agreement are granted in conjunction with the security interests granted to Agent, for the benefit of the Lender Group and the Bank Product Providers, pursuant to the Security Agreement. Each Grantor hereby acknowledges and affirms that the rights and remedies of Agent with respect to the security interest in the Copyright Collateral made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

4. AUTHORIZATION TO SUPPLEMENT. Grantors hereby authorize Agent unilaterally to modify this Agreement by amending Schedule I to include any United States registered copyrights or applications therefor which become part of the Copyright Collateral under the Security Agreement. Notwithstanding the foregoing, no failure to so modify this Copyright Security Agreement or amend Schedule I shall in any way affect, invalidate or detract from Agent’s continuing security interest in all Collateral, whether or not listed on Schedule I.

5. COUNTERPARTS. This Copyright Security Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Any signatures delivered by a party by facsimile transmission or by e-mail transmission shall be deemed an original signature hereto.

[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, each Grantor has caused this Copyright Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

GRANTORS:		,
		a corporation, as a Grantor

		By:
		Name:
		Title:

		,
		a corporation, as a Grantor

		By:
		Name:
		Title:

		,
		a corporation, as a Grantor

		By:
		Name:
		Title:

SIGNATURE PAGE OF COPYRIGHT SECURITY AGREEMENT

AGENT:		WELLS FARGO FOOTHILL, INC.,
		a California corporation, as Agent

		By:
		Name:
		Title:

SIGNATURE PAGE OF COPYRIGHT SECURITY AGREEMENT

SCHEDULE I
TO
COPYRIGHT SECURITY AGREEMENT

COPYRIGHT REGISTRATIONS

Grantor	Country	Copyright	Registration No.	Registration Date

EXHIBIT B

FORM OF PATENT SECURITY AGREEMENT

This PATENT SECURITY AGREEMENT (this “Patent Security Agreement”) is made this day of , 2004, among the Grantors listed on the signature pages hereof (collectively, jointly and severally, “Grantors” and each individually “Grantor”), and WELLS FARGO FOOTHILL, INC., in its capacity as administrative agent for the Lender Group and the Bank Product Providers (together with its successors and assigns in such capacity, “Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement dated of November 30, 2004 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, including all exhibits and schedules thereto, the “Credit Agreement”) among Altra Industrial Motion, Inc., a Delaware corporation (“Parent”), each of its Subsidiaries identified on the signature pages thereof (Parent and such Subsidiaries, “Borrowers”), the lenders party thereto as “Lenders” (“Lenders”), and Agent, the Lender Group agreed to make certain financial accommodations available to Borrowers from time to time pursuant to the terms and conditions thereof;

WHEREAS, the members of Lender Group are willing to make the financial accommodations to Borrowers as provided for in the Credit Agreement, but only upon the condition, among others, that the Grantors shall have executed and delivered to Agent, for the benefit of the Lender Group and the Bank Product Providers, that certain Security Agreement dated as of November 30, 2004 (including all annexes, exhibits or schedules thereto, as from time to time amended, restated, amended and restated, supplemented or otherwise modified, the “Security Agreement”); and

WHEREAS, pursuant to the Security Agreement, Grantors are required to execute and deliver to Agent, for the benefit of the Lender Group and the Bank Product Providers, this Patent Security Agreement.

1. DEFINED TERMS. All capitalized terms used but not otherwise defined herein have the meanings given to them in the Security Agreement and/or the Credit Agreement.

2. GRANT OF SECURITY INTEREST IN PATENT COLLATERAL. Each Grantor hereby grants to Agent, for the benefit of the Lender Group and the Bank Product Providers, a continuing first priority security interest (subject to Permitted Liens) in all of such Grantor’s right, title and interest in, to and under the following, whether presently existing or hereafter created or acquired (collectively, the “Patent Collateral”):

(a) all of its Patents and rights in and to Patent Intellectual Property Licenses to which it is a party including those referred to on Schedule I hereto;

(b) all reissues, continuations, continuations-in-part, substitutes, extensions or renewals of, and improvements on, the foregoing; and

(c) all products and proceeds of the foregoing, including, without limitation, any claim by such Grantor against third parties for past, present or future infringement of any Patent.

3. SECURITY AGREEMENT. The security interests granted pursuant to this Patent Security Agreement are granted in conjunction with the security interests granted to Agent, for the benefit of the Lender Group and the Bank Product Providers, pursuant to the Security Agreement. Each Grantor hereby acknowledges and affirms that the rights and remedies of Agent with respect to the security interest in the Patent Collateral made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

4. AUTHORIZATION TO SUPPLEMENT. Grantors hereby authorize Agent unilaterally to modify this Agreement by amending Schedule I to include any patentable inventions or applications therefor which become part of the Patent Collateral under the Security Agreement. Notwithstanding the foregoing, no failure to so modify this Patent Security Agreement or amend Schedule I shall in any way affect, invalidate or detract from Agent’s continuing security interest in all Collateral, whether or not listed on Schedule I.

5. COUNTERPARTS. This Patent Security Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Any signatures delivered by a party by facsimile transmission or by e-mail transmission shall be deemed an original signature hereto.

[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

GRANTORS:	,
	a corporation, as a Grantor

	By:
	Name:
	Title:


	,
	a corporation, as a Grantor

	By:
	Name:
	Title:


	,
	a corporation, as a Grantor
	By:
	Name:
	Title:

SIGNATURE PAGE OF PATENT SECURITY AGREEMENT

AGENT:	WELLS FARGO FOOTHILL, INC.,
	a California corporation, as Agent

	By:
	Name:
	Title:

SIGNATURE PAGE OF PATENT SECURITY AGREEMENT

SCHEDULE I
TO
PATENT SECURITY AGREEMENT

PATENTS AND PATENT APPLICATIONS

Grantor	Country	Patent	Registration No.	Registration Date

EXHIBIT C

PLEDGED INTERESTS ADDENDUM

This Pledged Interests Addendum, dated as of , 20 , is delivered pursuant to Section 6 of the Security Agreement referred to below. The undersigned hereby agrees that this Pledged Interests Addendum may be attached to that certain Security Agreement, dated as of November 30, 2004 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”), made by the undersigned, together with the other Grantors named therein, to Wells Fargo Foothill, Inc., as Agent. Initially capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Security Agreement and/or the Credit Agreement. The undersigned hereby agrees that the additional interests listed on this Pledged Interests Addendum as set forth below shall be and become part of the Pledged Interests pledged by the undersigned to the Agent in the Security Agreement and any pledged company set forth on this Pledged Interests Addendum as set forth below shall be and become a “Pledged Company” under the Security Agreement, each with the same force and effect as if originally named therein.

The undersigned hereby certifies that the representations and warranties set forth in Section 5 of the Security Agreement of the undersigned are true and correct as to the Pledged Interests listed herein on and as of the date hereof.

	[ ]


	By:

	Name:

	Title:

SIGNATURE PAGE OF PLEDGED INTERESTS ADDENDUM

Name of Pledgor	Name of Pledged Company	Number of Shares/Units	Class of Interests	Percentage of Class Owned	Certificate Nos.

EXHIBIT D

FORM OF TRADEMARK SECURITY AGREEMENT

This TRADEMARK SECURITY AGREEMENT (this “Trademark Security Agreement”) is made this day of , 2004, among Grantors listed on the signature pages hereof (collectively, jointly and severally, “Grantors” and each individually “Grantor”), and WELLS FARGO FOOTHILL, INC., in its capacity as Agent for the Lender Group and the Bank Product Providers (together with its successors and assigns in such capacity, “Agent”).

W I T N E S S E T H:

WHEREAS, the members of the Lender Group are willing to make the financial accommodations to Borrowers as provided for in the Credit Agreement, but only upon the condition, among others, that Grantors shall have executed and delivered to Agent, for the benefit of Lender Group and the Bank Product Providers, that certain Security Agreement dated as of November 30, 2004 (including all annexes, exhibits or schedules thereto, as from time to time amended, restated, amended and restated, supplemented or otherwise modified, the “Security Agreement”); and

WHEREAS, pursuant to the Security Agreement, Grantors are required to execute and deliver to Agent, for the benefit of Lender Group and the Bank Product Providers, this Trademark Security Agreement.

1. DEFINED TERMS. All capitalized terms used but not otherwise defined herein have the meanings given to them in the Security Agreement and/or the Credit Agreement.

2. GRANT OF SECURITY INTEREST IN TRADEMARK COLLATERAL. Each Grantor hereby grants to Agent, for the benefit of the Lender Group and the Bank Product Providers, a continuing first priority security interest (subject to Permitted Liens) in all of such Grantor’s right, title and interest in, to and under the following, whether presently existing or hereafter created or acquired (collectively, the “Trademark Collateral”):

(a) all of its Trademarks and rights in and to Trademark Intellectual Property Licenses to which it is a party including those referred to on Schedule I hereto;

(b) all extensions, modifications and renewals of the foregoing;

(d) all products and proceeds of the foregoing, including, without limitation, any claim by such Grantor against third parties for past, present or future (i) infringement or dilution of any Trademark, or (ii) injury to the goodwill associated with any Trademark.

3. SECURITY AGREEMENT. The security interests granted pursuant to this Trademark Security Agreement are granted in conjunction with the security interests granted to Agent, for the benefit of the Lender Group and the Bank Product Providers, pursuant to the Security Agreement. Each Grantor hereby acknowledges and affirms that the rights and remedies of Agent with respect to the security interest in the Trademark Collateral made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

4. AUTHORIZATION TO SUPPLEMENT. Grantors hereby authorize Agent unilaterally to modify this Agreement by amending Schedule I to include any trademarks, registrations, or applications therefor (including, without limitation, extensions or renewals) which become part of the Trademark Collateral under the Security Agreement. Notwithstanding the foregoing, no failure to so modify this Trademark Security Agreement or amend Schedule I shall in any way affect, invalidate or detract from Agent’s continuing security interest in all Collateral, whether or not listed on Schedule I.

5. COUNTERPARTS. This Trademark Security Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Any signatures delivered by a party by facsimile transmission or by e-mail transmission shall be deemed an original signature hereto.

[signature pages follow]

IN WITNESS WHEREOF, each Grantor has caused this Trademark Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

GRANTORS:	,
	a corporation, as a Grantor

	By:
	Name:
	Title:


	,
	a corporation, as a Grantor

	By:
	Name:
	Title:


	,
	a corporation, as a Grantor
	By:
	Name:
	Title:

SIGNATURE PAGE OF TRADEMARK SECURITY AGREEMENT

AGENT:	WELLS FARGO FOOTHILL, INC.,
	a California corporation, as Agent

	By:
	Name:
	Title:

SIGNATURE PAGE OF TRADEMARK SECURITY AGREEMENT

SCHEDULE I
to
TRADEMARK SECURITY AGREEMENT

Trademark Registrations/Applications

Grantor	Country	Mark	Application/ Registration No.	App/Reg Date

EX-10.24 54 a2155511zex-10_24.htm EXHIBIT 10.24

Exhibit 10.24

EXECUTION COPY

PATENT SECURITY AGREEMENT

This PATENT SECURITY AGREEMENT (this “Patent Security Agreement”) is made this 30^th day of November, 2004, among the Grantors listed on the signature pages hereof (collectively, jointly and severally, “Grantors” and each individually “Grantor”), and WELLS FARGO FOOTHILL, INC., in its capacity as administrative agent for the Lender Group and the Bank Product Providers (together with its successors and assigns in such capacity, “Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement dated of November 30, 2004 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, including all exhibits and schedules thereto, the “Credit Agreement”) among Altra Industrial Motion, Inc., a Delaware corporation (“Parent”), each of its Subsidiaries identified on the signature pages thereof (Parent and such Subsidiaries, “Borrowers”), the lenders party thereto as “Lenders” (“Lenders”), and Agent, the Lender Group agreed to make certain financial accommodations available to Borrowers from time to time pursuant to the terms and conditions thereof;

WHEREAS, pursuant to the Security Agreement, Grantors are required to execute and deliver to Agent, for the benefit of the Lender Group and the Bank Product Providers, this Patent Security Agreement.

1. DEFINED TERMS. All capitalized terms used but not otherwise defined herein have the meanings given to them in the Security Agreement and/or the Credit Agreement.

(a) all of its Patents and rights in and to Patent Intellectual Property Licenses to which it is a party including those referred to on Schedule I hereto;

(b) all reissues, continuations, continuations-in-part, substitutes, extensions or renewals of, and improvements on, the foregoing; and

(c) all products and proceeds of the foregoing, including, without limitation, any claim by such Grantor against third parties for past, present or future infringement of any Patent.

3. SECURITY AGREEMENT. The security interests granted pursuant to this Patent Security Agreement are granted in conjunction with the security interests granted to Agent, for the benefit of the Lender

Group and the Bank Product Providers, pursuant to the Security Agreement. Each Grantor hereby acknowledges and affirms that the rights and remedies of Agent with respect to the security interest in the Patent Collateral made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

GRANTORS:		WARNER ELECTRIC TECHNOLOGY LLC, a Delaware limited liability company, as a Grantor, BOSTON GEAR LLC, a Delaware limited liability company, as a Grantor,
		By:
		Name:	Michael L. Hurt
		Title:	Chief Executive Officer


AGENT:	WELLS FARGO FOOTHILL, INC.,
	a California corporation, as Agent

	By:
	Name:
	Title:

SCHEDULE I
TO
PATENT SECURITY AGREEMENT

PATENTS AND PATENT APPLICATIONS

Grantor	Country	Patent	Registration No.	Registration Date

EX-10.25 55 a2155511zex-10_25.htm EXHIBIT 10.25

Exhibit 10.25

EXECUTION COPY

TRADEMARK SECURITY AGREEMENT

This TRADEMARK SECURITY AGREEMENT (this “Trademark Security Agreement”) is made this 30^th day of November, 2004, among Grantors listed on the signature pages hereof (collectively, jointly and severally, “Grantors” and each individually “Grantor”), and WELLS FARGO FOOTHILL, INC., in its capacity as Agent for the Lender Group and the Bank Product Providers (together with its successors and assigns in such capacity, “Agent”).

W I T N E S S E T H:

WHEREAS, the members of the Lender Group are willing to make the financial accommodations to Borrowers as provided for in the Credit Agreement, but only upon the condition, among others, that Grantors shall have executed and delivered to Agent, for the benefit of Lender Group and the Bank Product Providers, that certain Security Agreement dated as of November 30, 2004 (including all annexes, exhibits or schedules thereto, as from time to time amended, restated, amended and restated, supplemented or otherwise modified, the “Security Agreement”); and

WHEREAS, pursuant to the Security Agreement, Grantors are required to execute and deliver to Agent, for the benefit of Lender Group and the Bank Product Providers, this Trademark Security Agreement.

1. DEFINED TERMS. All capitalized terms used but not otherwise defined herein have the meanings given to them in the Security Agreement and/or the Credit Agreement.

(a) all of its Trademarks and rights in and to Trademark Intellectual Property Licenses to which it is a party including those referred to on Schedule I hereto;

(b) all extensions, modifications and renewals of the foregoing;

[signature pages follow]

IN WITNESS WHEREOF, each Grantor has caused this Trademark Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

GRANTORS:	KILIAN MANUFACTURING CORPORATION, a Delaware corporation, as a Grantor, WARNER ELECTRIC TECHNOLOGY LLC, a Delaware limited liability company, as a Grantor, FORMSPRAG LLC, a Delaware limited liability company, as a Grantor, BOSTON GEAR LLC, a Delaware limited liability company, as a Grantor


	By:
	Name:		Michael L. Hurt
	Title:		Chief Executive Officer


	AMERIDRIVES INTERNATIIONAL, L.P., a Delaware limited partnership, as a Grantor,

	By:	American Enterprises MPT Corp., its general partner

				By:
				Name:	Michael L. Hurt
				Title:	Chief Executive Officer

AGENT:	WELLS FARGO FOOTHILL, INC.,
	a California corporation, as Agent

	By:
	Name:
	Title:

[SIGNATURE PAGE OF TRADEMARK SECURITY AGREEMENT]

SCHEDULE I
to
TRADEMARK SECURITY AGREEMENT

Trademark Registrations/Applications

Grantor	Country	Mark	Application/ Registration No.	App/Reg Date

EX-10.26 56 a2155511zex-10_26.htm EXHIBIT 10.26

Exhibit 10.26

EXECUTION COPY

INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT

among

WELLS FARGO FOOTHILL, INC.,

as Senior Agent,

THE BANK OF NEW YORK TRUST COMPANY, N.A.,

as Trustee and Collateral Agent,

ALTRA INDUSTRIAL MOTION, INC.,

and certain of its SUBSIDIARIES,

as Borrowers and Guarantors

Dated as of November 30, 2004

INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT

THIS INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT dated as of November 30, 2004 (this “Agreement”) is made by and among WELLS FARGO FOOTHILL, INC., as senior agent (the “Original Senior Agent”) under and pursuant to the Credit Agreement (as hereinafter defined), THE BANK OF NEW YORK TRUST COMPANY, N.A. (“BNY”), in its capacity as collateral agent under the Indenture Loan Documents (as hereinafter defined) (in such capacity, the “Collateral Agent”), BNY as Trustee under the Indenture Loan Documents (in such capacity, the “Trustee”), Altra Industrial Motion, Inc., a Delaware corporation (“Parent” ), those certain subsidiaries of Parent identified as Borrowers on the signature pages hereto (collectively with Parent, the “Borrowers”) those certain subsidiaries of Parent identified as Guarantors on the signature pages hereto (collectively with Parent, the “Guarantors”).

RECITALS

A. Borrowers, Guarantors, Collateral Agent, and Trustee have entered into an Indenture, dated as of November 30, 2004 (the “Indenture”), pursuant to which the Borrowers incurred indebtedness for certain notes (such notes, together with all other notes issued after the date hereof and exchange notes issued in exchange therefore, the “Notes”) in an aggregate principal amount at maturity of $165,000,000 under the Indenture which, together with the interest, premiums, fees, costs and expenses (including, without limitation, attorneys fees and disbursements and including interest accrued after the initiation of any Insolvency Proceeding, whether or not allowed or allowable in any Insolvency Proceeding) and the other Secured Obligations (as defined in the Indenture Security Agreement (defined below)) are referred to herein as the “Indenture Secured Obligations”. The repayment of the Indenture Secured Obligations is secured by security interests in and liens on the assets and properties (the “Collateral”) described in the Security Agreement dated as of the date hereof (the “Indenture Security Agreement”) made by the Borrowers and the Guarantors in favor of the Collateral Agent for the benefit of the Collateral Agent, the Trustee, and the Noteholders, the Trademark Security Agreement, dated as of the date hereof, made by the Borrowers and Guarantors in favor of the Collateral Agent for the benefit of the Collateral Agent, the Trustee, and the Noteholders (the “Indenture Trademark Security Agreements”), the Copyright Security Agreement, entered into from time to time, made by the Borrowers and Guarantors in favor of the Collateral Agent for the benefit of the Collateral Agent, the Trustee, and the Noteholders (the “Indenture Copyright Security Agreements”), the Patent Security Agreement, dated as of the date hereof, made by the Borrowers and Guarantors in favor of the Collateral Agent for the benefit of the Collateral Agent, the Trustee, and the Noteholders (the “Indenture Patent Security Agreements”), and certain real property mortgages (made from time to time, in each case, by a Borrower or a Guarantor in favor of the Collateral Agent for the benefit of the Collateral Agent, the Trustee, and the Noteholders, each an “Indenture Mortgage” and, together with the

Indenture, the Indenture Security Agreement, the Indenture Trademark Security Agreement, Indenture Copyright Security Agreement, Indenture Patent Security Agreement, and all Control Agreements (as defined in the Indenture Security Agreement), and the other Note Documents (as defined in the Indenture Security Agreement) executed and delivered in connection therewith, the “Indenture Agreements”).

B. Parent, the Borrowers, the Original Senior Agent and the lenders a party thereto have entered into a Credit Agreement dated as of November 30, 2004 (the “Original Credit Agreement”) and the Guarantors, the Senior Lenders and the Original Senior Agent have entered into those certain guarantees (the “Guarantees”) pursuant to which the Senior Lenders agreed, upon the terms and conditions stated therein, to make loans and advances to and to issue letters of credit on account of the Borrowers up to the principal amount of $30,000,000, together with the fees, interest, expenses and other obligations due under the Original Credit Agreement. The repayment of the Obligations (as that term is defined in the Original Credit Agreement) is secured by first priority security interests in and liens on the Collateral described in the Security Agreement dated as of the date hereof (the “Senior Security Agreement”) made by the Borrowers and the Guarantors in favor of the Original Senior Agent for the benefit of the Original Senior Agent, the Senior Lenders and the Bank Product Providers (as defined in the Credit Agreement), the Trademark Security Agreement, dated as of the date hereof, made by the Borrowers and the Guarantors in favor of the Original Senior Agent for the benefit of the Original Senior Agent, the Senior Lenders and the Bank Product Providers (the “Senior Trademark Security Agreements”), the Copyright Security Agreement, entered into from time to time, made by the Borrowers and the Guarantors in favor of the Original Senior Agent for the benefit of the Original Senior Agent, the Senior Lenders and the Bank Product Providers (the “Senior Copyright Security Agreements”), the Patent Security Agreement, dated as of the date hereof, made by the Borrowers and the Guarantors in favor of the Original Senior Agent for the benefit of the Original Senior Agent, the Senior Lenders and the Bank Product Providers (the “Senior Patent Security Agreements”), and certain real property mortgages (made from time to time, in each case, by a Borrower or a Guarantor in favor of the Original Senior Agent for the benefit of the Original Senior Agent, the Senior Lenders and the Bank Product Providers, each a “Senior Mortgage” and, together with the Credit Agreement, the Guarantees, the Senior Security Agreement, the Senior Trademark Security Agreement, Senior Copyright Security Agreement, Senior Patent Security Agreement, and all Control Agreements (as defined in the Credit Agreement) and the other Loan Documents (as defined in the Credit Agreement) executed and delivered in connection therewith, the “Senior Agreements”).

C. One of the conditions of the Original Credit Agreement is that the priority of the security interests in and liens on the Collateral to secure the Credit Agreement Secured Obligations (as hereinafter defined) be senior to the security interests in and liens on the Collateral to secure the Indenture Secured Obligations, in the manner and to the extent provided in this Agreement.

D. The Senior Agent and the Collateral Agent desire to enter into this Agreement concerning the respective rights of the Senior Agent and the Collateral Agent with respect to the priority of their respective security interests in and liens on the Collateral.

E. The terms of the Indenture permit the Borrowers and the Guarantors to enter into the Original Credit Agreement, subject to compliance with certain conditions, and in connection therewith authorize and direct the Collateral Agent to enter into this Agreement.

F. In order to induce the Senior Agent to extend credit to the Borrowers and the Guarantors and for purposes of certain conditions precedent and covenants of the Original Credit Agreement, the Senior Agent and the Collateral Agent hereby agree as follows:

ARTICLE I.

DEFINITIONS

Section 1.01 Terms Defined Above and in the Recitals. As used in this Agreement, the following terms shall have the respective meanings indicated in the opening paragraph hereof and in the above Recitals:

“Agreement”

“BNY”

“Borrower”

“Collateral”

“Collateral Agent”

“Guarantees”

“Guarantors”

“Indenture”

“Indenture Agreements”

“Indenture Copyright Security Agreement”

“Indenture Patent Security Agreement”

“Indenture Secured Obligations”

“Indenture Security Agreement”

“Indenture Trademark Security Agreement”

“Original Senior Agent”

“Original Credit Agreement”

“Parent”

“Senior Agreements”

“Senior Copyright Security Agreement”

“Senior Patent Security Agreement”

“Senior Security Agreement”

“Senior Trademark Security Agreement”

“Trustee”

Section 1.02 Credit Agreement Definitions. All capitalized terms which are used but not defined herein shall have the same meaning as in the Original Credit Agreement, as in effect on the date hereof.

Section 1.03 Other Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

“Capital Stock” means (a) in the case of a corporation, corporate stock, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (c) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (d) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of property of, the issuing Person.

“Cash Collateral” means any Collateral consisting of cash or cash equivalents, any security entitlement (as defined in the UCC) and any financial assets (as defined in the UCC).

“Control Collateral” means any Collateral consisting of a certificated security (as defined in the UCC), investment property (as defined in the UCC), a deposit account (as defined in the UCC and any other Collateral as to which a Lien may be perfected through possession or control by the secured party, or any agent therefor.

“Credit Agreement” means any Credit Agreement (as defined in the Indenture), including one or more credit facilities (including the Original Credit Agreement), in each case, as amended, restated, modified, renewed, refunded, replaced, or refinanced in whole or in part from time to time, including (a) any agreement extending the maturity of, consolidating, otherwise restructuring (including adding Subsidiaries or affiliates of the Borrowers or any other Persons as parties thereto) or refinancing all or any portion of the Obligations or Commitments as those terms are defined in the Original Credit Agreement, (b) any New Credit Facility and (c) any other agreement that itself is a Credit Agreement hereunder) and whether by the same or any other agent, lender, group of lenders or institutional investors and whether or not increasing the amount of indebtedness that may be incurred thereunder.

“Credit Agreement Secured Obligations” means all Obligations and all other amounts owing or due under the terms of any Credit Agreement and the other Senior Loan Documents, including any and all amounts payable under or in respect of the Senior Loan Documents, as amended, restated, modified, renewed, refunded, replaced, or refinanced in whole or in part from time to time, including principal, premium, interest, fees, attorneys’ fees, costs, charges, expenses, reimbursement obligations, any obligation to post cash collateral in respect of letters of credit or indemnities in respect thereof,

indemnities, guarantees, and all other amounts payable thereunder or in respect thereof (including, in each case, all amounts accruing on or after the commencement of any Insolvency Proceeding relating to any Borrower, any Guarantor or any other Person irrespective of whether a claim for all or any portion of such amounts is allowable or allowed in any Insolvency Proceeding).

“Discharge of Credit Agreement Secured Obligations” means payment in full in cash (or in the case of Letters of Credit and Bank Product Obligations, the cash collateralization as required by the Senior Loan Documents) of the Credit Agreement Secured Obligations (other than Credit Agreement Secured Obligations consisting solely of contingent indemnification obligations under the Senior Loan Documents) after or concurrently with termination of all commitments to extend credit under any Credit Agreement.

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“Exercise Any Secured Creditor Remedies” or “Exercise of Secured Creditor Remedies” means (a) the taking of any action to enforce or realize upon any Lien, including the institution of any foreclosure proceedings or the noticing of any public or private sale or other disposition pursuant to Article 9 of the applicable Uniform Commercial Code, (b) the exercise of any right or remedy provided to a secured creditor or otherwise on account of a Lien under the Senior Loan Documents, the Indenture Loan Documents, applicable law, in an Insolvency Proceeding or otherwise, including the election to retain Collateral in satisfaction of a Lien, (c) the taking of any action or the exercise of any right or remedy in respect of the collection on, set off against, marshaling of, or foreclosure on the Collateral or the Proceeds of Collateral, (d) the sale, lease, license, or other disposition of all or any portion of the Collateral, by private or public sale, other disposition or any other means permissible under applicable law, (e) the solicitation of bids from third parties to conduct the liquidation of all or a material portion of Collateral to the extent undertaken and being diligently pursued in good faith to consummate the sale of such Collateral within a commercially reasonable time, (f) the engagement or retention of sales brokers, marketing agents, investment bankers, accountants, appraisers, auctioneers or other third parties for the purposes of valuing, marketing, promoting and selling the Collateral to the extent undertaken and being diligently pursued in good faith to consummate the sale of such Collateral within a commercially reasonable time, and (g) the exercise of any other enforcement right relating to the Collateral (including the exercise of any voting rights relating to any Capital Stock and including any right of recoupment or set-off) whether under the Senior Loan Documents, the Indenture Loan Documents, applicable law, in an Insolvency Proceeding or otherwise.

“Indenture Loan Documents” shall mean the Indenture, the Notes, the Indenture Agreements, and such other agreements, instruments and certificates as defined or referred to in the Indenture.

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

“Lien” means any interest in an asset securing an obligation owed to, or a claim by, any Person other than the owner of the asset, irrespective of whether (a) such interest is based on the common law, statute, or contract, (b) such interest is recorded or perfected, and (c) such interest is contingent upon the occurrence of some future event or events or the existence of some future circumstance or circumstances. Without limiting the generality of the foregoing, the term “Lien” includes the lien or security interest arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, security agreement, conditional sale or trust receipt, or from a lease, consignment, or bailment for security purposes and also includes reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Real Property.

“Lien Priority” means with respect to any Lien of the Senior Agent or the Collateral Agent in the Collateral, the order of priority of such Lien as specified in Section 2.01.

“Loan Documents” means the Senior Loan Documents and the Indenture Loan Documents.

“Maximum Priority Debt Amount” means, as of any date of determination, the principal amount (including the undrawn amount of all letters of credit) of Credit Agreement Secured Obligations as of such date up to, but not in excess of, $30,000,000, (a) minus the amount of all permanent commitment reductions made from and after the date hereof under the effective Credit Agreement, but to be reinstated at the time of entering into any New Credit Facility, and (b) plus any interest, fees, Lender Group Expenses and indemnities payable under the Senior Loan Documents or in respect thereof (including, in each case, all amounts accruing on or after the commencement of any Insolvency Proceeding relating to any Borrower, any Guarantor or any other Person irrespective of whether a claim for all or any portion of such amounts is allowable or allowed in any such Insolvency Proceeding).

“New Credit Facility” means one or more debt facilities entered into by any Borrower or any of its Subsidiaries following a Discharge of Credit Agreement Secured Obligations under the then effective Credit Agreement, providing for revolving credit loans or letters of credit, in each case, as amended, restated, modified, renewed,

refunded, replaced, or refinanced in whole or in part from time to time; provided that such debt facility qualifies as a Credit Agreement (as defined in the Indenture).

“Noteholders” means each of the holders of the Notes.

“Party” means Senior Agent and Collateral Agent.

“Payment Collateral” means all accounts, instruments, chattel paper, letters of credit, deposit accounts, securities accounts, and payment intangibles, together with all supporting obligations (as those terms are defined in the UCC), in each case composing a portion of the Collateral.

“Person” means any natural person, corporation, limited liability company, limited partnership, general partnership, limited liability partnership, joint venture, trust, land trust, business trust, or other organization, irrespective of whether such organization is a legal entity, and shall include a government and any agency or political subdivision thereof.

“Proceeds” means (i) all “proceeds” as defined in Article 9 of the UCC with respect to the Collateral, and (ii) whatever is recoverable or recovered when Collateral is sold, exchanged, collected, or disposed of, whether voluntarily or involuntarily.

“Recovery” has the meaning set forth in Section 5.03.

“Senior Agent” means the Original Senior Agent, together with all successors, assigns, transferees, participants, replacement or refinancing lenders, of the Original Senior Agent, including any Person designated as an Agent under any Credit Agreement; provided, that for purposes of this Agreement, the Collateral Agent, prior to the termination of the Original Credit Agreement, shall be entitled to deal only with the Original Senior Agent until such time as the Original Senior Agent shall have assigned or otherwise transfer to another Agent thereof all of its rights and obligations hereunder to such other Agent pursuant to a written document which has been provided by the Original Senior Agent or a designee to the Collateral Agent and until receipt thereof, Collateral Agent shall not be liable for any such dealings (including the turning over of any Collateral or proceeds thereof to the Original Senior Agent at a time when any other Agent and not the Original Senior Agent was entitled thereto).

“Senior Lenders” means the lenders from time to time party to a Credit Agreement.

“Senior Loan Documents” means any Credit Agreement and the other Loan Documents (as such term is defined in the Original Credit Agreement), or any other security, collateral, ancillary or other document entered into in connection with or related to any agreement that is a Credit Agreement, as such documents may be amended,

restated, modified, renewed, refunded, replaced, or refinanced in whole or in part from time to time, in accordance with this Agreement.

“Standstill Notice” means a written notice from or on behalf of Senior Agent to the Collateral Agent stating that an Event of Default has occurred and stating that such written notice is a “Standstill Notice”.

“Standstill Period” has the meaning set forth in Section 2.03.

“UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York

Rules of Construction. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the term “including” is not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Article, section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Any reference herein to any Person shall be construed to include such Person’s successors and assigns.

ARTICLE II.

LIEN PRIORITY

Section 2.01 Agreement to Subordinate. Notwithstanding the date, time, method, manner or order of grant, attachment, or perfection of any Liens granted to the Collateral Agent, the Trustee, or the Noteholders in respect of all or any portion of the Collateral or of any Liens granted to the Senior Agent or any Senior Lender in respect of all or any portion of the Collateral, or the order or time of filing or recordation of any document or instrument for perfecting the Liens in favor of Senior Agent (or any Senior Lender) or the Collateral Agent (or the Trustee or any Noteholder) in any Collateral or any provision of the applicable Uniform Commercial Code, any other applicable law, the Indenture Loan Documents, the Senior Loan Documents or any other circumstance whatsoever, the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, hereby agrees that:

(a) (i) any Lien in respect of all or any portion of the Collateral now or hereafter held by or on behalf of the Collateral Agent, the Trustee, or any Noteholder that

secures all or any portion of the Indenture Secured Obligations, shall in all respects be junior and subordinate to all Liens granted to the Senior Agent and the Senior Lenders in the Collateral to secure all or any portion of the Credit Agreement Secured Obligations up to (but not in excess of) the Maximum Priority Debt Amount, and (ii) any Lien in respect of all or any portion of the Collateral now or hereafter held by or on behalf of the Senior Agent or any Senior Lender that secures all or any portion of the Credit Agreement Secured Obligations in excess of the Maximum Priority Debt Amount, shall in all respects be junior and subordinate to all Liens granted to the Collateral Agent, the Trustee or any Noteholder in the Collateral to secure all or any portion of the Indenture Secured Obligations, and

(b) (i) any Lien in respect of all or any portion of the Collateral now or hereafter held by or on behalf of the Senior Agent (or any Senior Lender) that secures all or any portion of the Credit Agreement Secured Obligations up to (but not in excess of) the Maximum Priority Debt Amount, shall in all respects be senior and prior to all Liens granted to the Collateral Agent (or the Trustee or any Noteholder) in the Collateral to secure all or any portion of the Indenture Secured Obligations, and (ii) any Lien in respect of all or any portion of the Collateral now or hereafter held by or on behalf of the Collateral Agent, the Trustee, or any Noteholder that secures all or any portion of the Indenture Secured Obligations, shall in all respects be senior and prior to all Liens granted to the Senior Agent and the Senior Lenders in the Collateral to secure all or any portion of the Credit Agreement Secured Obligations in excess of the Maximum Priority Debt Amount,

The Collateral Agent, for and on behalf of itself, the Trustee and the Noteholders, acknowledges and agrees that, concurrently herewith, the Senior Agent, for the benefit of itself and the Senior Lenders, has been granted Liens upon all of the Collateral in which the Collateral Agent has been granted Liens and the Collateral Agent hereby consents thereto. The Senior Agent acknowledges and agrees that the Collateral Agent, for the benefit of itself, the Trustee, and the Noteholders, has been granted Liens upon all of the Collateral and the Senior Agent hereby consents thereto. The subordination of Liens (up to the Maximum Priority Debt Amount) by the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders in favor of the Senior Agent and the Senior Lenders herein shall not be deemed to subordinate the Collateral Agent’s Liens to the Liens of any other Person. The subordination of Liens (in excess of the Maximum Priority Debt Amount) in favor of the Collateral Agent, for the benefit of itself, the Trustee and the Noteholders herein shall not be deemed to subordinate the Senior Agent’s Liens to the Liens of any other Person.

Section 2.02 Waiver of Right to Contest Liens. The Collateral Agent agrees, on behalf of itself, the Trustee, and the Noteholders, that it and they shall not (and hereby waives, on behalf of itself and the Noteholders any right to) take any action to contest or challenge (or assist or support any other Person in contesting or challenging), directly or indirectly, whether or not in any proceeding (including in any Insolvency Proceeding),

the validity, priority, enforceability, or perfection of the Liens of the Senior Agent in respect of the Collateral. The Collateral Agent, for itself, the Trustee, and on behalf of the Noteholders, agrees that neither the Collateral Agent nor the Trustee will take any action that would hinder any exercise of remedies undertaken by the Senior Agent under the Senior Loan Documents, including any public or private sale, lease, exchange, transfer, or other disposition of the Collateral, whether by foreclosure or otherwise. The Collateral Agent, for itself, the Trustee, and on behalf of the Noteholders, hereby waives any and all rights it, the Trustee, or the Noteholders may have as a junior lien creditor or otherwise to contest, protest, object to, interfere with the manner in which the Senior Agent seeks to enforce the Liens in any portion of the Collateral (it being understood and agreed that the terms of this Agreement shall govern with respect to the Collateral even if any portion of the Liens securing the Credit Agreement Secured Obligations are avoided, disallowed, set aside, or otherwise invalidated in any judicial proceeding or otherwise). The Senior Agent, for itself and the Senior Lenders, agrees that it shall not (and hereby waives any right to) take any action to contest or challenge (or assist or support any other Person in contesting or challenging), directly or indirectly, whether or not in any proceeding (including in any Insolvency Proceeding), the validity, priority, enforceability, or perfection of the Liens of the Collateral Agent in respect of the Collateral. Following the Discharge of Credit Agreement Secured Obligations, the Senior Agent, on behalf of itself and the Senior Lenders, agrees that it will not take any action that would hinder any exercise of remedies undertaken by the Collateral Agent, the Trustee, or any Noteholder under the Indenture Loan Documents, including any public or private sale, lease, exchange, transfer, or other disposition of the Collateral, whether by foreclosure or otherwise. Following the Discharge of Credit Agreement Secured Obligations, the Senior Agent, on behalf of itself and the Senior Lenders, hereby waives any and all rights it may have as a junior lien creditor or otherwise to contest, protest, object to, interfere with the manner in which the Collateral Agent, the Trustee or any Noteholder seeks to enforce the Liens in any portion of the Collateral (it being understood and agreed that the terms of this Agreement shall govern with respect to the Collateral even if any portion of the Liens securing the Indenture Secured Obligations are avoided, disallowed, set aside, or otherwise invalidated in any judicial proceeding or otherwise).

Section 2.03 Remedies Standstill. At any time after the occurrence and during the continuation of an Event of Default under any of the Loan Documents, the Senior Agent may send a Standstill Notice to the Collateral Agent. The Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, agrees that from and after the date of its receipt of any Standstill Notice, neither the Collateral Agent nor the Trustee will Exercise Any Secured Creditor Remedies (other than its rights under Section 2.04(d)) unless and until (a) the Senior Agent has expressly waived or acknowledged the cure of the applicable Event of Default in writing or the Discharge of the Credit Agreement Secured Obligations shall have occurred, or (b) 120 days shall have elapsed from the date of the Collateral Agent’s receipt of such Standstill Notice. From and after the earlier to occur of (i) the Collateral Agent’s receipt of such waiver or cure notice, or (ii) the elapsing of such

120th day period, any of the Collateral Agent, the Trustee, or any Noteholder may commence to Exercise Any Secured Creditor Remedies (subject to the provisions of this Agreement, including the immediately succeeding sentence, Section 4.02 hereof and except with respect to any such Collateral as to which the Senior Agent is diligently effecting the collection, foreclosure, sale or other realization upon or disposition of). Notwithstanding any other provision in this Agreement, none of the Collateral Agent, the Trustee or any Noteholder may Exercise Any Secured Creditor Remedies prior to the Discharge of Credit Agreement Secured Obligations (x) with respect to any item of Collateral so long as Senior Agent has commenced and is diligently pursuing its Exercise of Secured Creditor Remedies in respect of such items of Collateral, and (y) without first providing Senior Agent at least 5 Business Days’ prior written notice. The Senior Agent may only send three (3) Standstill Notices following the date hereof (it being understood and agreed as clarification to the foregoing that no more than three (3) Standstill Notices may be provided whether delivered hereunder or under any corresponding provision of any other agreement similar hereto that may be delivered pursuant to Section 7.17 hereof) and no more than one (1) Standstill Notice may be given by the Senior Agent in any consecutive 365-day period. The time period during which the Collateral Agent is not permitted to Exercise any Secured Creditor Remedies under this section is referred to herein as the “Standstill Period”.

Section 2.04 Exercise of Rights.

(a) No Other Restrictions. Except as expressly set forth in this Agreement, each of the Collateral Agent, the Trustee, the Noteholders, the Senior Agent and the Senior Lenders shall have any and all rights and remedies it may have as a creditor under applicable law, including the rights to exercise all rights and remedies in foreclosure or otherwise with respect to any of the Collateral; provided, however, that any such exercise by the Collateral Agent, the Trustee or the Noteholders, and any collection or sale of all or any portion of the Collateral by the Collateral Agent, the Trustee or the Noteholders, shall be subject to the Liens of the Senior Agent on the Collateral to the extent provided in Section 2.01 and to the provisions of this Agreement including Section 4.02 hereof. In exercising rights and remedies with respect to the Collateral, the Senior Agent may enforce the provisions of the Senior Loan Documents and exercise remedies thereunder, all in such order and in such manner as it may determine in the exercise of its sole discretion. Such exercise and enforcement shall include the sale, lease, license, or other disposition of all or any portion of the Collateral by private or public sale or any other means permissible under applicable law or any agreement; provided, that the Senior Agent agrees to provide copies of any notices that it is required under applicable law to deliver to Parent, any Borrower or any Guarantor to the Collateral Agent; provided further, that the failure to provide any such copies to the Collateral Agent shall not impair any of the Senior Agent’s rights hereunder. In exercising rights and remedies with respect to the Collateral, the Collateral Agent may enforce the provisions of the Indenture Security Documents and exercise remedies thereunder, all in such order and in such manner as it may determine in the exercise of its

sole discretion. Such exercise and enforcement shall include the sale, lease, license, or other disposition of all or any portion of the Collateral by private or public sale or any other means permissible under applicable law or any agreement; provided, that the Collateral Agent agrees to provide copies of any notices that it is required under applicable law to deliver to Parent, any Borrower or any Guarantor to the Senior Agent; provided further, that the failure to provide any such copies to the Senior Agent shall not impair any of the Collateral Agent’s rights hereunder.

(b) Release of Liens. (i) In the event of any such private or public sale, Collateral Agent agrees, on behalf of itself, the Trustee, and the Noteholders, that such sale will be free and clear of the Liens securing the Indenture Secured Obligations and, if the sale or other disposition includes the Equity Interests in any Borrower or any Guarantor, agrees to release the entities whose Equity Interests are sold from all Indenture Secured Obligations so long as Senior Agent and Senior Lenders also release the entities whose Equity Interests are sold from all Credit Agreement Secured Obligations. In furtherance thereof, Collateral Agent agrees that it will execute any and all Lien releases or other documents reasonably requested by Senior Agent in connection therewith, so long as the proceeds from such sale or other disposition of the Collateral are applied in accordance with the terms of this Agreement.

(ii) If and to the extent that the Senior Agent or its designee releases any of its Liens on any Collateral in connection with the sale, lease, exchange, transfer or other disposition of the Collateral in accordance with the terms of this Agreement, the Liens, if any, of the Collateral Agent, for itself or for the benefit of the Trustee and the Noteholders, on such Collateral shall be automatically, unconditionally and simultaneously released and the Collateral Agent, for itself and for each of the Trustee and the Noteholders, promptly shall execute and deliver to the Senior Agent such termination statements, releases and other documents as the Senior Agent may request to effectively confirm such release in respect of such payments. Notwithstanding the foregoing, the obligation of the Collateral Agent to release its Lien on such Collateral shall arise only if such sale, lease, exchange, transfer or other disposition of the Collateral is effected in connection with an exercise of remedies or is permitted by (or permitted pursuant to a waiver of or consent to a transaction otherwise prohibited by) the Senior Loan Documents and the terms hereof.

(iii) In the event of any private or public sale by Collateral Agent permitted by the terms of this Agreement, Senior Agent agrees, on behalf of itself and the Lender Group, that such sale will be free and clear of the Liens securing the Senior Secured Obligations and, if the sale or other disposition includes the Equity Interests in any Borrower or any Guarantor, agrees to release the entities whose Equity Interests are sold from all Senior Secured Obligations so long as Collateral Agent, the Trustee and the Noteholders also release the entities whose Equity Interests are sold from all Indenture Secured Obligations. In furtherance thereof, Senior Agent agrees that it will execute any and all Lien releases or other documents reasonably requested by Collateral Agent in

connection therewith, so long as the proceeds from such sale or other disposition of the Collateral are applied in accordance with the terms of this Agreement.

(iv) If and to the extent that the Collateral Agent or its designee releases any of its Liens on any Collateral in connection with the sale, lease, exchange, transfer or other disposition of the Collateral in accordance with the terms of this Agreement, the Liens, if any, of the Senior Agent, for itself or for the benefit of the Lender Group, on such Collateral shall be automatically, unconditionally and simultaneously released and the Senior Agent, for itself and for the Lender Group, promptly shall execute and deliver to the Collateral Agent such termination statements, releases and other documents as the Collateral Agent may request to effectively confirm such release in respect of such payments. Notwithstanding the foregoing, the obligation of the Senior Agent to release its Lien on such Collateral shall arise only if such sale, lease, exchange, transfer or other disposition of the Collateral is effected in connection with an exercise of remedies or is permitted by (or permitted pursuant to a waiver of or consent to a transaction otherwise prohibited by) the Indenture Documents and the terms hereof.

(c) Except as provided in Section 3.01, the Collateral Agent, the Trustee and the Noteholders may exercise, and nothing herein shall constitute a waiver of, any right it may have at law or equity to receive notice of, or to commence or join with any creditor in commencing any Insolvency Proceeding or to join or participate in, any action or proceeding or other activity described in Section 3.01; provided, however, that exercise of any such right by the Collateral Agent shall be subject to all of the terms and conditions of this Agreement, including the obligation to turn over Collateral and Proceeds to the Senior Agent for application to the Credit Agreement Secured Obligations as provided in Section 4.02.

(d) The Collateral Agent may make such demands or file such claims in respect of the Indenture Secured Obligations as may be necessary to prevent the waiver or bar of such claims under applicable statutes of limitations or other statutes, court orders or rules of procedure (including, without limitation, the filing of any proofs of claim in any Insolvency Proceeding), but except as provided in this Section 2.04 or otherwise in this Agreement, the Collateral Agent shall not take any actions restricted by this Agreement until the Discharge of Credit Agreement Secured Obligations shall have occurred.

(e) Following the Discharge of Credit Agreement Secured Obligations, the other provisions of this Section 2.04 shall apply to the Collateral Agent, for the benefit of itself, the Trustee and the Noteholders as if it were the Senior Agent and the Senior Agent was the Collateral Agent, mutatis mutandis.

ARTICLE III.

ACTIONS OF THE PARTIES

Section 3.01 Limitation on Certain Actions. Notwithstanding any other provision hereof, during any Standstill Period prior to the date that the Discharge of Credit Agreement Secured Obligations occurs, the Collateral Agent will not:

(a) commence receivership or foreclosure proceedings against any Borrower, any Guarantor, or any Collateral;

(b) make demands or file claims in respect of the Indenture Secured Obligations except as permitted under Section 2.04(d) hereof;

(d) notify third party account debtors to make payment directly to it or any of its agents or other Persons acting on its behalf.

Section 3.02 Agent for Perfection. Each of the Senior Agent, on behalf of itself and the Senior Lenders, and the Collateral Agent, for and on behalf of itself, the Trustee, and each Noteholder, as applicable, agree to hold all Control Collateral and Cash Collateral that is part of the Collateral in its respective possession, custody, or control (or in the possession, custody, or control of agents or bailees for either, as applicable) as agent for the other solely for the purpose of perfecting the security interest granted to each in such Control Collateral or Cash Collateral subject to the terms and conditions of this Section 3.02. None of the Senior Agent, the Senior Lenders, the Collateral Agent, the Trustee, or the Noteholders, as applicable, shall have any obligation whatsoever to the others to assure that the Control Collateral is genuine or owned by any Borrower, any Guarantor or any other Person or to preserve rights or benefits of any Person. The duties or responsibilities of the Senior Agent and the Collateral Agent under this Section 3.02 are and shall be limited solely to holding or maintaining control of the Control Collateral and the Cash Collateral as agent for the other for purposes of perfecting the Lien held by the Collateral Agent or the Senior Agent, as applicable. The Senior Agent is not and shall not be deemed to be a fiduciary of any kind for the Collateral Agent, the Trustee, the Noteholders or any other Person. The Collateral Agent is not and shall not be deemed to be a fiduciary of any kind for the Senior Agent, any Senior Lender or any other Person. In the event that (a) any of the Collateral Agent, the Trustee, or any Noteholder receives any Proceeds or Collateral in contravention of the Lien Priority, or (b) the Senior Agent or any Senior Lender receives any Proceeds or Collateral in contravention of the Lien Priority, it shall promptly pay over such Proceeds or Collateral to (i) in the case of clause (a), the Senior Agent, or (ii) in the case of clause (b), the Collateral Agent, in the same form as received with any necessary endorsements, for application in accordance with the provisions of Section 4.02 of this Agreement.

ARTICLE IV.

NOTICES AND APPLICATION OF PROCEEDS

Section 4.01 Notices of Exercise. Concurrently with any exercise by the Collateral Agent of any of its rights and remedies under the Indenture Loan Documents following the occurrence of any default under the Indenture Loan Documents, the Collateral Agent shall give notice of such exercise to the Senior Agent and shall only exercise such rights or remedies in a manner consistent with the terms of this Agreement. Concurrently with any exercise by the Senior Agent of any of its rights and remedies under the Senior Loan Documents following the occurrence of any default under the Senior Loan Documents, the Senior Agent shall give notice of such exercise to the Collateral Agent and shall only exercise such rights or remedies in a manner consistent with the terms of this Agreement.

Section 4.02 Application of Proceeds.

(a) Revolving Nature of Credit Agreement Secured Obligations. As long as the Senior Agent is not exercising any of its remedies as a secured creditor under the Senior Loan Documents and including during any Standstill Period, the Senior Agent may apply any and all of the proceeds of the Collateral consisting of accounts receivable, other rights to payment or Cash Collateral in accordance with the provisions of the Senior Loan Documents, subject to the provisions of this Agreement, including Sections 3.02 and 4.02 hereof. The Collateral Agent, for and on behalf of itself, the Trustee, and the Noteholders, expressly acknowledges and agrees that (a) any such application of the proceeds of accounts receivable, other rights to payment or Cash Collateral or the release of any Lien by the Senior Agent upon any portion of the Collateral in connection with a Permitted Disposition (as that term is defined in the Credit Agreement) shall not be considered to be the exercise of remedies under this Agreement; and (b) all Proceeds or Cash Collateral received by Senior Agent in connection therewith may be applied, reversed, reapplied, credited or reborrowed, in whole or in part, as Credit Agreement Secured Obligations without reducing the Maximum Priority Debt Amount.

(b) Turnover of Cash Collateral After Payment. Upon the Discharge of the Credit Agreement Secured Obligations, the Senior Agent shall deliver to the Collateral Agent or execute such documents as the Collateral Agent may reasonably request to cause the Collateral Agent to have control over any Cash Collateral or Control Collateral still in Senior Agent’s or its designee’s possession, custody or control in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct, to be applied by the Collateral Agent to the Indenture Secured Obligations. Proceeds of any exercise by the Senior Agent or the Collateral Agent, as applicable, of any of their respective secured creditor rights or remedies under any of the Loan Documents, under applicable law, or otherwise with respect to any Collateral or Proceeds, shall be (a) until the Discharge of the Credit Agreement Secured

Obligations, retained by the Senior Agent or promptly turned over by the Collateral Agent, the Trustee, or any Noteholder, as the case may be, to the Senior Agent in the same form as received, with any necessary endorsements, (b) after the Discharge of the Credit Agreement Secured Obligations and until all Indenture Secured Obligations have been paid in full in cash, retained by the Collateral Agent or promptly turned over by the Senior Agent to the Collateral Agent in the same form as received, with any necessary endorsements, and (c) if there are any amounts still due or any obligations outstanding to the Senior Agent under the Senior Loan Documents in excess of the Maximum Priority Debt Amount after the payment in full in cash of all Indenture Secured Obligations, shall be retained by the Senior Agent or promptly turned over by the Collateral Agent to the Senior Agent in the same form as received, with any necessary endorsements.

(c) Application of Proceeds. The Senior Agent and the Collateral Agent hereby agree that all Collateral and all Proceeds received by either of them upon the Exercise Of Secured Creditor Remedies shall be applied,

first, to the payment of costs and expenses of the Senior Agent or the Collateral Agent, as applicable, in connection with such exercise,

second, to the payment of the Credit Agreement Secured Obligations up to (but not in excess of) the Maximum Priority Debt Amount,

third, to the payment of the Indenture Secured Obligations, and

fourth, to the payment of any Credit Agreement Secured Obligations in excess of the Maximum Priority Debt Amount.

In exercising remedies, whether as a secured creditor or otherwise, the Senior Agent shall have no obligation or liability to the Collateral Agent, the Trustee, or to any Noteholder and the Collateral Agent shall have no obligation or liability to the Senior Agent or any Senior Lender regarding the adequacy of any Proceeds or for any action or omission save and except solely an action or omission that breaches the express obligations undertaken by each Party under the terms of this Agreement.

Section 4.03 Specific Performance. Each of the Senior Agent and the Collateral Agent is hereby authorized to demand specific performance of this Agreement, whether or not any Borrower or any Guarantor shall have complied with any of the provisions of any of the Loan Documents, at any time when the other shall have failed to comply with any of the provisions of this Agreement applicable to it; provided, however, the remedy of specific performance shall not be available, and the asserting party shall be free to assert any and all legal defenses it may possess, if such remedy would result in, or otherwise constitute, a violation of the Employee Retirement Income Security Act of 1974, as amended. Each of the Senior Agent and the Collateral Agent hereby irrevocably waives any defense based on the adequacy of a remedy at law, which might be asserted as a bar to such remedy of specific performance.

ARTICLE V.

INTERCREDITOR ACKNOWLEDGEMENTS AND WAIVERS

Section 5.01 Notice of Acceptance and Other Waivers.

(a) All Credit Agreement Secured Obligations at any time made or incurred by any Borrower or any Guarantor shall be deemed to have been made or incurred in reliance upon this Agreement, and the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, hereby waives (i) notice of acceptance, or proof of reliance, by the Senior Agent of this Agreement, and (ii) notice of the existence, renewal, extension, accrual, creation, or non-payment of all or any part of the Credit Agreement Secured Obligations. Neither the Senior Agent, nor any Senior Lender, nor any of their respective affiliates, directors, officers, employees, or agents shall be liable for failure to demand, collect, or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral or to take any other action whatsoever with regard to the Collateral or any part thereof, except as specifically provided in this Agreement. If the Senior Agent honors (or fails to honor) a request by a Borrower for an extension of credit pursuant to the Credit Agreement or any of the Senior Loan Documents, whether Senior Agent has knowledge that the honoring of (or failure to honor) any such request would constitute a default under the terms of the Indenture or any Indenture Loan Document or an act, condition, or event that, with the giving of notice or the passage of time, or both, would constitute such a default, or if Senior Agent otherwise should exercise any of its contractual rights or remedies under the Senior Loan Documents (subject to the express terms and conditions hereof), Senior Agent shall not have any liability whatsoever to the Collateral Agent, the Trustee or any Noteholder as a result of such action, omission, or exercise (so long as any such exercise does not breach the express terms and provisions of this Agreement). The Senior Agent will be entitled to manage and supervise its loans and extensions of credit under the Credit Agreement and other Senior Loan Documents as the Senior Agent may, in its sole discretion, deem appropriate, and the Senior Agent may manage its loans and extensions of credit without regard to any rights or interests that the Collateral Agent, the Trustee, or any of the Noteholders have in the Collateral or otherwise except as otherwise expressly set forth in this Agreement. The Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, agrees that the Senior Agent shall not incur any liability as a result of a sale, lease, license, or other disposition of the Collateral, or any part thereof, pursuant to the Senior Loan Documents conducted in accordance with mandatory provisions of applicable law.

(b) None of Collateral Agent, Trustee, or any of the Noteholders nor any of their affiliates, directors, officers, employees, or agents shall be liable for failure to demand, collect, or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral or to take any other action whatsoever with regard to the Collateral or any part thereof, except as specifically

provided in this Agreement. If Collateral Agent, Trustee, or any of the Noteholders should exercise any of their contractual rights or remedies under the Indenture Agreements (subject to the express terms and conditions hereof), none of Collateral Agent, Trustee, or any of the Noteholders shall have any liability whatsoever to the Senior Agent as a result of such action, omission, or exercise (so long as any such exercise does not breach the express terms and provisions of this Agreement). The Collateral Agent, Trustee, and Noteholders will be entitled to manage and supervise the Parent’s obligations under the Indenture Agreements as they may, in their sole discretion, deem appropriate, and they may manage such obligations without regard to any rights or interests that the Senior Agent has in the Collateral or otherwise except as otherwise expressly set forth in this Agreement. Subject to Section 2.03, the Senior Agent agrees that none of the Collateral Agent, the Trustee, or the Noteholders shall incur any liability as a result of a sale, lease, license, or other disposition of the Collateral, or any part thereof, pursuant to the Indenture Agreements conducted in accordance with mandatory provisions of applicable law.

Section 5.02 Modifications to Senior Loan Documents and Indenture Agreements.

(a) The Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, hereby agrees that, without affecting the obligations of the Collateral Agent, the Trustee and the Noteholders hereunder, the Senior Agent, on behalf of itself and the Senior Lenders, may, at any time and from time to time, in its sole discretion without the consent of or notice to the Collateral Agent, the Trustee or any Noteholder (except to the extent such notice or consent is required pursuant to the express provisions of this Agreement), and without incurring any liability to the Collateral Agent, the Trustee or any Noteholder or impairing or releasing the subordination provided for herein, amend, restate, supplement, replace, refinance, extend, consolidate, restructure, or otherwise modify the Credit Agreement or any of the Senior Loan Documents in any manner whatsoever, including, to

(i) change the manner, place, time, or terms of payment or renew or alter, all or any of the Credit Agreement Secured Obligations or otherwise amend, restate, supplement, or otherwise modify in any manner, or grant any waiver or release with respect to, all or any part of the Credit Agreement Secured Obligations or any of the Senior Loan Documents,

(ii) retain or obtain a Lien on any property of any Person to secure any of the Credit Agreement Secured Obligations, and in that connection to enter into any additional Senior Loan Documents,

(iii) amend, or grant any waiver, compromise or release with respect to, or consent to any departure from, any guaranty or other obligations of any Person obligated in any manner under or in respect of the Credit Agreement Secured Obligations,

(iv) release its Lien on any Collateral or other property,

(v) exercise or refrain from exercising any rights against any Borrower, any Guarantor or any other Person,

(vi) retain or obtain the primary or secondary obligation of any other Person with respect to any of the Credit Agreement Secured Obligations, and

(vii) otherwise manage and supervise the Credit Agreement Secured Obligations as the Senior Agent shall deem appropriate.

(b) The Senior Agent, on behalf of itself and the Senior Lenders, hereby agrees that Collateral Agent, on behalf of itself, the Trustee, and the Noteholders may, at any time and from time to time, in its sole discretion without the consent of or notice to the Senior Agent (except to the extent such notice or consent is required pursuant to the express provisions of this Agreement), and without incurring any liability to the Senior Agent or impairing or releasing the subordination provided for herein, amend, restate, supplement, replace, refinance, extend, consolidate, restructure, or otherwise modify the Indenture Agreements in any manner whatsoever, provided, however, that in no event shall Collateral Agent, the Trustee, or any Noteholder obtain a Lien on any assets of any Borrower or any Guarantor not constituting Collateral unless (i) Senior Agent also obtains a Lien on such assets either before or at the same time as Collateral Agent, the Trustee or such Noteholder or (ii) Senior Agent declines in a writing to Collateral Agent to obtain a Lien on such assets.

(c) Notwithstanding anything to the contrary herein, this Section 5.02 shall not be construed to constitute a waiver by the Collateral Agent, the Trustee, or any Noteholder of any provision of the Indenture.

Section 5.03 Reinstatement and Continuation of Agreement.

(a) If Senior Agent is required in any Insolvency Proceeding or otherwise to turn over or otherwise pay to the estate of any Borrower, any Guarantor or any other Person any amount (a “Recovery”), then the Credit Agreement Secured Obligations shall be reinstated to the extent of such Recovery. If this Agreement shall have been terminated prior to such Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair, or otherwise affect the obligations of the parties hereto from such date of reinstatement. All rights, interests, agreements, and obligations of the Collateral Agent, the Trustee, the Senior Agent, the Senior Lenders, and the Noteholders under this Agreement shall remain in full force and effect and shall continue irrespective of the commencement of, or any discharge, confirmation, conversion, or dismissal of any Insolvency Proceeding by or against any Borrower or any Guarantor or any other circumstance which otherwise might constitute a defense available to, or a discharge of any Borrower or any Guarantor in

respect of the Credit Agreement Secured Obligations. No priority or right of the Senior Agent shall at any time be prejudiced or impaired in any way by any act or failure to act on the part of any Borrower or any Guarantor or by the noncompliance by any Person with the terms, provisions, or covenants of the Credit Agreement, the Indenture or any of the other Loan Documents, regardless of any knowledge thereof which the Senior Agent may have.

(b) If Collateral Agent, the Trustee, or any Noteholder is required in any Insolvency Proceeding or otherwise to turn over or otherwise pay to the estate of any Borrower, any Guarantor or any other Person a Recovery, then the Indenture Secured Obligations shall be reinstated to the extent of such Recovery. No priority or right of the Collateral Agent, the Trustee, or any Noteholder shall at any time be prejudiced or impaired in any way by any act or failure to act on the part of any Borrower or any Guarantor or by the noncompliance by any Person with the terms, provisions, or covenants of the Credit Agreement, the Indenture or any of the other Indenture Agreements, regardless of any knowledge thereof which the Collateral Agent, the Trustee, or any Noteholder may have.

Section 5.04 New Credit Facility. At any time any Borrower or any of its Subsidiaries enters into a New Credit Facility (provided that the lender providing such New Credit Facility or its designee executes an acknowledgment, in substantially the form of Annex A), this Agreement shall be reinstated in full force and effect, and any prior termination thereof, if any, as a result of a prior Discharge of Credit Agreement Secured Obligations, shall not diminish, release, discharge, impair, or otherwise affect the obligations of the parties hereto (including the lender providing for the New Credit Facility) from such date of reinstatement. It is hereby agreed that the entering into of any new Credit Agreement would not constitute an amendment, modification or supplement to any of the Indenture Loan Documents.

ARTICLE VI.

INSOLVENCY PROCEEDINGS

Section 6.01 DIP Financing. If any Borrower or any Guarantor shall be subject to any Insolvency Proceeding and the Senior Agent shall desire, prior to the Discharge of Credit Agreement Secured Obligations, to permit the use of cash collateral or to permit any Borrower or any Guarantor to obtain financing under Section 363 or Section 364 of Title 11 of the United States Code or any similar provision under the law applicable to any Insolvency Proceeding (“DIP Financing”) to be secured by all or any portion of the Collateral, then the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, agrees that it will raise no objection to such use of cash collateral or DIP Financing and will not request adequate protection or any other relief in connection with its or their interest in any such Collateral except to the extent specified in this Section 6.01. To the extent the Liens securing the Credit Agreement Secured Obligations are subordinated or

pari passu with such DIP Financing, the Collateral Agent, for and on behalf of itself, the Trustee, and the Noteholders, hereby agrees that its Liens in the Collateral shall be subordinated to such DIP Financing (and all obligations relating thereto) upon the terms and conditions specified in this Agreement. Until the Discharge of Credit Agreement Secured Obligations has occurred, the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, agrees that none of them shall seek relief from the automatic stay or any other stay in any Insolvency Proceeding in respect of the Collateral and will not provide or offer to provide any DIP Financing secured by a Lien senior to or pari passu with the Liens securing the Credit Agreement Secured Obligations, in each case unless the Senior Agent otherwise has provided its express written consent.

Section 6.02 No Contest. The Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, agrees that, prior to the Discharge of Credit Agreement Secured Obligations, none of them shall contest (or support any other Person contesting) (a) any request by the Senior Agent for adequate protection, or (b) any objection by the Senior Agent to any motion, relief, action, or proceeding based on Senior Agent claiming that their interests in the Collateral are not adequately protected or any other similar request under any law applicable to an Insolvency Proceeding. Notwithstanding the foregoing, in any Insolvency Proceeding, if the Senior Agent is granted adequate protection in the form of additional collateral in connection with any DIP Financing or use of cash collateral under Section 363 or Section 364 of Title 11 of the United States Code or any similar law applicable to any Insolvency Proceeding, then the Collateral Agent, on behalf of itself, the Trustee, or any of the Noteholders, may seek or request adequate protection in the form of a Lien on such additional collateral, which Lien hereby is and shall be deemed to be subordinated to the Liens securing the Credit Agreement Secured Obligations up to (but not in excess of) the Maximum Priority Debt Amount and such DIP Financing (and all obligations relating thereto) on the same basis as the Lien Priority. In the event the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, seeks or requests adequate protection and such adequate protection is granted in the form of Liens in respect of additional collateral, then the Collateral Agent, on behalf of itself, the Trustee, and each of the Noteholders, agrees that the Senior Agent also shall be granted a senior Lien on such additional collateral as security for the Credit Agreement Secured Obligations (and for any such DIP Financing) and that any Lien on such additional collateral securing the Indenture Secured Obligations shall be subordinated to the Liens in respect of such additional collateral securing the Credit Agreement Secured Obligations and any such DIP Financing and any other Liens granted to the Senior Agent as adequate protection on the same basis as the other Liens securing the Indenture Secured Obligations are subordinated to the Credit Agreement Secured Obligations under this Agreement up to the Maximum Priority Debt Amount. Nothing contained herein shall prohibit or in any way limit the Senior Agent, prior to the Discharge of Credit Agreement Secured Obligations, from objecting in any Insolvency Proceeding or otherwise to any action taken by the Collateral Agent, the Trustee or any of the Noteholders, including the seeking by the Collateral Agent, the Trustee or any Noteholder of adequate protection or the asserting by the Collateral Agent, the Trustee or

any Noteholder of any of its rights and remedies under the Indenture Loan Documents or otherwise.

Section 6.03 Asset Sales. The Collateral Agent agrees, on behalf of itself, the Trustee, and the Noteholders, that it will not oppose any sale consented to by Senior Agent of Collateral pursuant to Section 363 or 365 of Title 11 of the United States Code (or any similar provision in any other applicable Bankruptcy Law) so long as the proceeds of such sale are applied in accordance with this Agreement.

Section 6.04 Enforceability. The provisions of this Agreement are intended to be and shall be enforceable under Section 510 of Title 11 of the United States Code. The Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, agrees that all distributions that the Collateral Agent, the Trustee, or any Noteholder receives in any Insolvency Proceeding on account of the Collateral or Proceeds shall be held in trust by such Person and turned over to the Senior Agent, on behalf of itself and the Senior Lenders, for application in accordance with Section 4.02 of this Agreement. To the extent that any amounts received by the Collateral Agent, the Trustee, or any Noteholder are paid over in connection with this provision, the obligations owed by the Borrower to such Person will be deemed to be reinstated to the extent of the amounts so paid over.

ARTICLE VII.

MISCELLANEOUS

Section 7.01 Rights of Subrogation. The Collateral Agent agrees that no payment or distribution to the Senior Agent pursuant to the provisions of this Agreement shall entitle the Collateral Agent, the Trustee, or any Noteholder to exercise any rights of subrogation in respect thereof until the Discharge of Credit Agreement Secured Obligations shall have occurred. Following the Discharge of Credit Agreement Secured Obligations, the Senior Agent agrees to execute such documents, agreements, and instruments as the Collateral Agent, the Trustee or any Noteholder may reasonably request to evidence the transfer by subrogation to any such Person of an interest in the Credit Agreement Secured Obligations resulting from payments or distributions to the Senior Agent by such Person, so long as all costs and expenses (including all reasonable legal fees and disbursements) incurred in connection therewith by the Senior Agent are paid by such Person upon request for payment thereof.

Section 7.02 Further Assurances. The Parties will, at their own expense and at any time and from time to time, promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that either Party may reasonably request, in order to protect any right or interest granted or purported to be granted hereby or to enable the Senior Agent or the Collateral Agent to exercise and enforce its rights and remedies hereunder; provided, however, that no Party shall be required to pay over any payment or distribution, execute any instruments or documents, or take any other action referred to in this Section 7.02 to the extent that such

action would contravene any law, order or other legal requirement, and in the event of a controversy or dispute, such Party may interplead any payment or distribution in any court of competent jurisdiction, without further responsibility in respect of such payment or distribution under this Section 7.02.

Section 7.03 Representations. The Original Agent represents and warrants to the Collateral Agent that it has the requisite power and authority under the Original Credit Agreement to enter into, execute, deliver, and carry out the terms of this Agreement on behalf of itself and the Senior Lenders. The Collateral Agent represents and warrants that it has the requisite power and authority under the Indenture to enter into, execute, deliver, and carry out the terms of this Agreement on behalf of itself, the Trustee, and the Noteholders.

Section 7.04 Amendments. No amendment or waiver of any provision of this Agreement nor consent to any departure by any Party hereto shall be effective unless it is in a written agreement executed by the Collateral Agent and the Senior Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

Section 7.05 Addresses for Notices. All demands, notices and other communications provided for hereunder shall be in writing and, if to the Collateral Agent, mailed or sent by telecopy or delivered to it, addressed to it as follows:

The Bank of New York Trust Company, N.A.
700 South Flower Street, Suite 500
Los Angeles, California 90017
Attention: Corporate Trust Department/Altra Industrial Motion, Inc.
Telephone: 213-630-6176
Facsmile: 213-630-6298

With a copy to:

Proskauer Rose LLP
1585 Broadway
New York, NY
Attention: Julie Allen, Esq..
Facsmile: 212-969-2900

if to the Senior Agent, mailed, sent or delivered thereto, addressed to it as follows:

Wells Fargo Foothill, Inc.
One Boston Place
Boston, MA 02108
Attention: Business Finance Manager
Facsimile: (617) 523-5839

With a copy to:

Morrison & Foerster LLP

1290 Avenue of the Americas

New York, NY 10104

Attention: Mark B. Joachim, Esq.

Facsimile: (212) 468-7900

If to Parent or Administrative Borrower, mailed, sent or delivered thereto, addressed to it as follows:

Altra Industrial Motion, Inc.
14 Hayward St.
Quincy, Massachusetts 02171
Attention: Michael L. Hurt
Facsimile: (617) 689-6202

With a copies to:

Genstar Capital, L.P.

Four Embarcadero Center, Suite 1900

San Francisco, CA 94111

Attention: Darren J. Gold

Facsimile: (415) 834-2383

and

Weil, Gotshal & Manges LLP

200 Crescent Court, Suite 300

Dallas, Texas 75201

Attention: Angela L. Fontana, Esq.

Facsimile: (214) 746-7777

or as to any party at such other address as shall be designated by such party in a written notice to the other parties complying as to delivery with the terms of this Section 7.05. All such demands, notices and other communications shall be effective, when mailed, two business days after deposit in the mails, postage prepaid, when sent by telecopy, when receipt is acknowledged by the receiving telecopy equipment (or at the opening of the next business day if receipt is after normal business hours), or when delivered, as the case may be, addressed as aforesaid.

Section 7.06 No Waiver, Remedies. No failure on the part of any Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other

or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

Section 7.07 Continuing Agreement, Transfer of Secured Obligations. This Agreement is a continuing agreement and shall (i) remain in full force and effect until the Discharge of the Credit Agreement Secured Obligations shall have occurred and the Indenture Secured Obligations shall have been paid in full, (ii) be binding upon the Parties and their successors and assigns, and (iii) inure to the benefit of and be enforceable by the Parties and their respective successors, transferees and assigns. Without limiting the generality of the foregoing clause (iii), the Senior Agent or any Senior Lender, or the Collateral Agent, the Trustee, or any Noteholder may assign or otherwise transfer all or any portion of the Credit Agreement Secured Obligations or the Indenture Secured Obligations, as applicable, to any other Person (other than any Borrower, any Guarantor or any Affiliate of any Borrower or any Guarantor), and such other Person shall thereupon become vested with all the rights and obligations in respect thereof granted to the Senior Agent or any Senior Lender, or the Collateral Agent, the Trustee, or any Noteholder, as the case may be, herein or otherwise.

Section 7.08 Information Concerning Financial Condition.

(a) Collateral Agent hereby assumes responsibility for keeping itself informed of the financial condition of the Borrowers and Guarantors and of all other circumstances bearing upon the risk of nonpayment of the Indenture Secured Obligations, and agrees that Senior Agent has and shall have no duty to advise Collateral Agent of information known to Senior Agent regarding such condition or any such circumstances. In the event Senior Agent, in its sole discretion, undertakes, at any time or from time to time, to provide any such information to Collateral Agent, Senior Agent shall be under no obligation (i) to provide any such information to Collateral Agent on any subsequent occasion, (ii) to undertake any investigation, or (iii) to disclose any information which, pursuant to its commercial finance practices, Senior Agent wishes to maintain confidential. Collateral Agent acknowledges and agrees that Senior Agent has made no warranties or representations with respect to the legality, validity, enforceability, collectability or perfection of the Credit Agreement Secured Obligations or any liens or security interests held in connection therewith.

(b) Senior Agent hereby assumes responsibility for keeping itself informed of the financial condition of the Borrowers and Guarantors and of all other circumstances bearing upon the risk of nonpayment of the Credit Agreement Secured Obligations, and agrees that Collateral Agent has and shall have no duty to advise Senior Agent of information known to Collateral Agent regarding such condition or any such circumstances. In the event Collateral Agent, in its sole discretion, undertakes, at any time or from time to time, to provide any such information to Senior Agent, Collateral Agent shall be under no obligation (i) to provide any such information to Senior Agent on any subsequent occasion, (ii) to undertake any investigation, or (iii) to disclose any

information which, pursuant to its commercial finance practices, Collateral Agent wishes to maintain confidential. Senior Agent acknowledges and agrees that Collateral Agent has made no warranties or representations with respect to the legality, validity, enforceability, collectability or perfection of the Indenture Secured Obligations or any liens or security interests held in connection therewith.

Section 7.09 Governing Law: Entire Agreement. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York except as otherwise preempted by applicable federal law. This Agreement constitutes the entire agreement and understanding among the Parties with respect to the subject matter hereof and supersedes any prior agreements, written or oral, with respect thereto.

Section 7.10 Counterparts. This Agreement maybe executed in any number of counterparts, and it is not necessary that the signatures of all Parties be contained on any one counterpart hereof, each counterpart will be deemed to be an original, and all together shall constitute one and the same document.

Section 7.11 No Third Party Beneficiary. This Agreement is solely for the benefit of the Parties (and their permitted assignees). No other Person (including Borrower, any Guarantor or any Affiliate of Borrower and any Subsidiary of Borrower or any Guarantor) shall be deemed to be a third party beneficiary of this Agreement.

Section 7.12 Headings. The headings of the articles and sections of this Agreement are inserted for purposes of convenience only and shall not be construed to affect the meaning or construction of any of the provisions hereof

Section 7.13 Severability. If any of the provisions in this Agreement shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement and shall not invalidate the Lien Priority or any other priority set forth in this Agreement.

Section 7.14 Collateral Agent Status. Nothing in this Agreement shall be construed to operate as a waiver by the Collateral Agent, with respect to any Borrower, any Guarantor, the Trustee, or any Noteholder, of the benefit of any exculpatory rights, privileges, immunities, indemnities, or reliance rights contained in the Indenture or any of the other Indenture Loan Documents. For all purposes of this Agreement, the Collateral Agent may (a) rely in good faith, as to matters of fact, on any representation of fact believed by the Collateral Agent to be true (without any duty of investigation) and that is contained in a written certificate of any authorized representative of any Borrower or of the Senior Agent or any Senior Lender, and (b) assume in good faith (without any duty of investigation), and rely upon, the genuineness, due authority, validity, and accuracy of any certificate, instrument, notice, or other document believed by it in good faith to be genuine and presented by the proper person. Each Borrower, Senior Agent, and each Senior Lender expressly acknowledge that the subordination and related agreements set forth herein by the Collateral Agent are made solely in its capacity as Collateral Agent

under the Indenture with respect to the Notes issued thereunder and the other Indenture Loan Documents and are not made by the Collateral Agent in its individual commercial capacity.

Section 7.15 Acknowledgment. Each Borrower and each Guarantor hereby acknowledges that it has received a copy of this Agreement and consents thereto, and agrees to recognize all rights granted thereby to the Senior Agent and the Collateral Agent and will not do any act or perform any obligation which is not in accordance with the agreements set forth in this Agreement. Each Borrower and each Guarantor further acknowledges and agrees that it is not an intended beneficiary or third party beneficiary under this Agreement.

Section 7.16 VENUE; JURY TRIAL WAIVER.

(a) THE PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE CITY OF NEW YORK OR THE SOUTHERN DISTRICT OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT SENIOR AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SENIOR AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH PARTY HERETO WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 7.16.

(b) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY HERETO REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

Section 7.17 Intercreditor Agreement. This Agreement is the Intercreditor Agreement referred to in the Indenture. If this Agreement or all or any portion of either Party’s rights or obligations hereunder are assigned or otherwise transferred to any other Person, such other Person shall execute and deliver an agreement containing terms substantially identical to those contained in this Agreement.

IN WITNESS WHEREOF, the Senior Agent, the Collateral Agent, each Borrower and each Guarantor has caused this Agreement to be duly executed and delivered as of the date first above written.

SENIOR AGENT:	WELLS FARGO FOOTHILL, INC., a California corporation


	By:
		Name:
		Title:

COLLATERAL	THE BANK OF NEW YORK TRUST COMPANY,
AGENT AND	N.A., in its capacities as Collateral Agent and Trustee under
TRUSTEE:	the Indenture (and not individually)


	By:
		Name:
		Title:

The undersigned, each a Borrower or Guarantor referred to in the foregoing Intercreditor Agreement, hereby agrees to comply with all of the terms and provisions of the Intercreditor Agreement in all respects.

	ALTRA INDUSTRIAL MOTION, INC., a Delaware corporation, as a Borrower

	By:
	Title:

	WARNER ELECTRIC LLC, a Delaware limited liability company, as a Borrower

	By:
	Title:

	KILIAN MANUFACTURING CORPORATION, a Delaware corporation, as a Borrower

	By:
	Title:

	WARNER ELECTRIC TECHNOLOGY LLC, a Delaware limited liability company, as a Borrower

	By:
	Title:

	FORMSPRAG LLC, a Delaware limited liability company, as a Borrower

	By:
	Title:

	BOSTON GEAR LLC, a Delaware limited liability company, as a Borrower

	By:
	Title:

	NUTTALL GEAR LLC, a Delaware limited liability company, as a Borrower

	By:
	Title:

	AMERIDRIVES INTERNATIONAL, L.P., a Delaware limited partnership, as a Borrower

	By:
	Title:

	THE KILIAN COMPANY, a Delaware corporation, as a Guarantor


	By:
	Title:

	WARNER ELECTRIC INTERNATIONAL HOLDING, INC., a Delaware corporation, as a Guarantor


	By:
	Title:

	AMERICAN ENTERPRISES MPT CORP., a Delaware corporation, as a Guarantor


	By:
	Title:

	AMERICAN ENTERPRISES MPT, L.P., a Delaware limited partnership, as a Guarantor


	By:
	Title:

Annex A

This ACKNOWLEDGMENT, dated as of , 20 , is delivered pursuant to Section 5.04 of the Intercreditor and Lien Subordination Agreement (the “Intercreditor Agreement”, dated as of November 30, 2004 by Wells Fargo Foothill, Inc. (as Senior Agent) and The Bank Of New York, as Collateral Agent and Trustee, and acknowledged by Altra Industrial Motion, Inc., as a Borrower and certain of its Subsidiaries as Borrowers and Guarantors. Capitalized terms used herein but not defined herein are used with the meanings given them in the Intercreditor Agreement.

By executing and delivering this Acknowledgment, the undersigned, as provided in Section 5.04 of the Intercreditor Agreement, hereby becomes a party to the Intercreditor Agreement as Senior Agent, with the same force and effect as if originally named as the Original Senior Agent therein.

IN WITNESS WHEREOF, the undersigned has caused this Acknowledgment to be duly executed and delivered as of the date first above written.

	[LENDER PROVIDING NEW CREDIT FACILITY]

	By:
			Name:
			Title:

EX-12.1 57 a2155511zex-12_1.htm EXHIBIT 12.1

Exhibit 12.1

Altrta Industrial Motion

Ratio of Earnings to Fixed Charges

($ in 000’s)

				Predecessor
	From			11 mths.
	Inception			ended				Yr.-ended			Yr.-ended				Yr.-ended
	Dec.01-31			Nov.30				Dec.31			Dec.31				Dec.31
	2004			2004				2003			2002				2001
Net income (loss)	$	(1,527	)	$		6,767		$	(8,933	)	$		(108,296	)	$	(338		)
Adjustments to net loss:
Cumulative effect of change accounting principle-goodwill impairment	—			—				—			83,412				—
Loss from discontinued operations	—			—				—			700				1,867
Interest expense	1,450			4,294				5,368			5,489				6,655
Interest component of operating rental expense	40			440				488			472				424
Income taxes	(248		)	5,430				(1,592		)	2,455				4,794
Earnings	$	(285	)	$		16,931		$	(4,669	)	$	(15,768		)	$	13,402

Fixed charges:
Interest expense	$	1,450		$			4,294	$	5,368		$	5,489			$		6,655
Interest component of operating rental expense	40			440				488			472				424

Total fixed charges	$	1,490		$	4,734			$	5,856		$	5,961			$		7,079

Ratio(1)(2)	—			3.58				—			—				1.89

(1) For purposes of calculating the ratio of earnings to fixed charges, earnings represent income before income taxes, discontinued operations, cumulative effect of change in accounting principle charges and fixed charges. Fixed charges represent interest expense and a portion of rental expense which we believe is representative of the interest component of rental expense.

(2) Earnings were insufficient to cover fixed charges in the period December 1 to December 31, 2004, and each of the years ended December 31, 2003 and 2002 by $1.8 million, $10.5 million, and $21.7 million, respectively.

EX-21.1 58 a2155511zex-21_1.htm EXHIBIT 21.1

EXHIBIT 21.1

Subsidiaries of Altra Industrial Motion, Inc.

Name of Subsidiary		Jurisdiction of Organization

• American Enterprises MPT Corp.		Delaware
• Nuttall Gear L L C		Delaware
• American Enterprises MPT Holdings, L.P.(1)		Delaware
• Ameridrives International, L.P.(2)		Delaware
• Boston Gear LLC		Delaware
• The Kilian Company		Delaware
• Kilian Manufacturing Corporation		Delaware
• 3091780 Nova Scotia Company		Nova Scotia, Canada
• Kilian Canada, ULC		Nova Scotia, Canada
• Warner Electric LLC		Delaware
• Formsprag LLC(3)		Delaware
• Warner Electric Technology LLC		Delaware
• Warner Electric International Holding, Inc.		Delaware
• Warner Electric UK Group Ltd.		United Kingdom
• Warner Electric UK Holding Ltd.		United Kingdom
• Wichita Company Ltd.		United Kingdom
• Warner Electric (Holdings) SAS		France
• Warner Electric Europe SAS		France
• Warner Electric Group GmbH		Germany
• Warner Electric Verwaltungs GmbH		Germany
• Stieber GmbH		Germany
• Warner Electric (Netherlands) Holding, B.V.		Netherlands
• Warner Electric Australia Pty. Ltd.		Australia
• Warner Shui Hing Limited		Hong Kong
• Warner Electric (Singapore) Ltd.		Singapore
• Warner Electric (Taiwan) Ltd.		Taiwan
• Warner Electric (Thailand) Ltd.		Thailand

(1) Altra Industrial Motion, Inc. owns 40.6% and American Enterprises MPT Corp. owns 59.4%.

(2) American Enterprises MPT Holdings, L.P. owns 99% and American Enterprises MPT Corp. owns 1%.

(3) Warner Electric LLC owns 70% and Ameridrives International, L.P. owns 30%.

EX-23.1 59 a2155511zex-23_1.htm EXHIBIT 23.1
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Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the captions "Experts" and to the use of our report dated April 27, 2005, in the Registration Statement (Form S-4 No. 333-00000) for the registration of $165,000,000 of 9% Senior Secured Notes due 2011.

Our audit also included the financial statement schedule of Altra Industrial Motion, Inc. listed in Item 21. This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ ERNST & YOUNG LLP

Richmond, Virginia
May 12, 2005

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Exhibit 23.1

EX-23.2 60 a2155511zex-23_2.htm EXHIBIT 23.2
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Exhibit 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTING FIRM

Consent of Independent Public Accounting Firm

We consent to the use in this Registration Statement of Altra Industrial Motion, Inc. on Form S-4 (No. 333- ) of our report on Kilian Manufacturing Corporation and Kilian Canada ULC, dated December 14, 2004, appearing in the Prospectus, which is part of this Registration Statement.

We also consent to the reference to our firm under the caption "Experts" in such prospectus.

/s/ FIRLEY, MORAN, FREER & EASSA, P.C.

Syracuse, New York
May 12, 2005

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Exhibit 23.2

EX-25.1 61 a2155511zex-25_1.htm EXHIBIT 25.1

Exhibit 25.1

FORM T-1

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) o

THE BANK OF NEW YORK TRUST COMPANY, N.A.

(Exact name of trustee as specified in its charter)

		95-3571558
(State of incorporation		(I.R.S. employer
if not a U.S. national bank)		identification no.)

700 South Flower Street
Suite 500
Los Angeles, California		90017
(Address of principal executive offices)		(Zip code)

Altra Industrial Motion, Inc.